Australia's Future Fund returned 1.6% in the quarter and 10.5% in the year ended March 31, boosting assets to A$129.6 billion ($98.1 billion).
The latest gains, roughly in line with the Melbourne-based sovereign wealth fund's annualized gains of 11% for the past five years, found fund executives welcoming the continued strength of global markets while predicting tougher times to come.
Peter Costello, chairman of the board, said in an emailed statement that while the Future Fund's portfolio continues to benefit from the strength of global markets, expectations of lower returns to come have left the fund's investment team “balancing the need to deliver returns against our obligation not to take excessive risk.”
David Neal, the fund's managing director, said in the same statement the Future Fund is maintaining levels of risk for its portfolio that remain toward “the lower end of our normal expectations.”
Asset allocation shifts over the past three months, while mostly incremental, generally moved in the direction of increased caution, with the fund's cash holdings climbing to 20.4% from 19.7% and its allocation to hedge funds rising to 15.1% from 14.2%.
Elsewhere, the fund's allocations edged lower, with public equities slipping to 29% from 29.1%; private equity falling to 10.6% from 10.9%; debt securities — mostly private debt — falling to 11.3% from 12%; infrastructure and timberland declining to 7.6% from 7.9% and property dropping to 6% from 6.2%.