Future Fund is a sovereign wealth fund that are owned by the general government which is what makes its sovereign and are known as special purpose investment funds or arrangements. To achieve financial objectives and for macroeconomic purposes they are usually created, as they hold, manage, or administer assets and inculcate various types of investment strategies.
Future fund received its initial and only contributions of $60.5bn on more than a decade ago and was set up in 2006. The fund’s contributions include a small slice of the proceeds of privatization of the telecommunications company, Telstra and of Budget surpluses. The Future Fund has made the Government $88bn as this $60.5bn has grown to just under $149bn. Since inception of 7.9% per annum, this represents investment returns. Particularly those associated with an ageing population in response to the assessment that Australia faced emerging costs, the Future Fund was established.
Individuals do not contribute into the Fund, as the money in the Future Fund is not owned by any individual they cannot draw it. It is known an intergenerational fund with contribution from the taxpayers of 2006 to future generations. To appoint the Future Fund Board of Guardians, Legislation sets out the responsibilities of Ministers, and for investing the assets of the Future Fund, guardians in turn are responsible.
Up from the original $60.5 billion in 2006, The Future Fund is now worth $149 billion, with returns running at 10.7 per cent in the 12 months to September 30, 2018. However, the returns in the three months were just 2.1 per cent ending September 30, 2018. Now worth a collective $181 billion, the Board of Guardians manages five public asset funds. 10-year return of 9.2% pa exceeds benchmark target of 6.5% pa, the fund while managing risk levels exceeds benchmark return across all time periods.
The Future Fund’s latest portfolio update shows is reallocating assets from hedge funds, cash and equities into property and private equity. While 'alternative' assets dropped from 15.4 per cent to 15 per cent, Cash dropped from 15.1 percent to 14 percent of the fund. Meanwhile, private equity jumped nearly $22 billion from 14.1 per cent to 14.8 per cent. Also, between June and September the property assets increased from 6.4 per cent of the fund to 7 per cent. In developed economies the fund's single biggest asset type is global equities and owns $26.7 billion worth of shares.
As at 30 September 2018, Future Fund Board of Guardians released its portfolio update. Delivering decent returns without excessive risk, the Future Fund portfolio continues to operate as intended. Delivering a return of 9.2% pa over the last 10 years, as at 30 September 2018 the value of the Future Fund was $148.8bn.
Global economic growth remains steady, Chair Peter Costello said. Markets continue to respond to rising interest rates while inflationary pressures are building in the US. The short-term economic outlook remains reasonably positive, for the longer-term outlook the impact of trade tensions, geopolitical and the potential for shocks to markets.
The asset allocation of the future funds as at September 30, 2018 is as follows:
Asset Allocation of Future Fund, Source: Company Reports
The Income available from dividends remains attractive for many investors.
We take a look at the best yields on the market and assess what they say about a company’s prospect.
One Thing is certain, though, Australia interest rates are still low, making income difficult to come by and keeping the focus for many investors on high yielding stocks. Kalkine’s team of analysts bought you handpicked report for “Top 25 Dividend Stocks For 2018.”
ASX-relevant Special Reports are published year-round to provide a detailed analysis into an investing opportunity or a potential risk to your portfolio.
Click here to get your free report.
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkinemedia.com and associated websites are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.
There is no investor left unperturbed with the ongoing trade conflicts between US-China and the devastating bushfire in Australia.
Are you wondering if the year 2020 might not have taken the right start? Dividend stocks could be the answer to that question.
As interest rates in Australia are already at record low levels, find out which dividend stocks are viewed as the most attractive investment opportunity in the current scenario in our report.