Australia’s Future Fund significantly increased its exposure to debt securities during the last quarter, with other highlights including the construction of a mandate with a Baltimore-based investor in venture capital funds and direct projects, and the launch of active Australian equities.
The A$58 billion (US$42.2 billion) Melbourne-based fund's portfolio update for March 31 revealed that debt securities exposure jumped to 21.9% from 17.3% in the previous quarter, for the portfolio, not including Telstra Corp. stock.
(When the Future Fund was launched in 2006, its initial funding from the government included shares of Telstra Corp., the formerly government-owned telecommunications company. The fund held about 2 billion shares as of November, when a required holding period expired. According to the investment policy on the fund’s website, the board expects to reduce that holding over time.)
New mandates with Goldman Sachs Asset Management and midmarket credit specialist Oak Hill Advisors were awarded in debt securities.
JF Capital Partners and Perennial Growth Management were beneficiaries of the fund's move into active Australian equities management, with the two firms sharing in the A$4.75 billion now allocated to the sector (9.3% of the ex-Telstra component, up from 8.6% in the previous quarter).
The lone new private equity mandate was with Montagu Newhall, an investor in venture capital funds as well as direct projects.
Two new property mandates also were awarded, to ING Clarion Real Estate Securities and Quadrant Real Estate Advisors.
The Future Fund’s ex-Telstra portfolio lost 1.32% for the quarter, totaling A$51.2 billion, while the Telstra holding plummeted 10.57% to A$6.8 billion.
Michael Bailey is editor of Investment & Technology, Sydney.
