Australia’s Future Fund, Melbourne, reported a 7.1% gain for the quarter ended March 31, lifting the value of its investment portfolio to A$117 billion ($91.4 billion) even as the fund’s cash holdings jumped by roughly A$4 billion.
The fund’s latest advance lifted its gain for the first nine months of its fiscal year ending June 30 to 15.1%, more than triple its targeted return of 4.5% for the nine-month period, a news release Tuesday showed.
Those gains came even as the fund reduced its exposure to risk assets over the past quarter, in recognition that the flood of central bank liquidity being deployed now to jump-start the global economy had left asset prices “generally fully priced and in some cases overpriced,” said Peter Costello, Future Fund chairman, in the news release.
David Neal, the fund’s managing director, said in a telephone interview that his investment team continued to “take a little risk out of the portfolio” during the past quarter, effectively bringing it to a “normal level” from what was possibly Future Fund’s highest risk exposures ever six month before.
As of March 31, 15.2% of the Future Fund’s portfolio was in cash, up from 12.8% three months before and its highest level in roughly five years.
Among risk assets, only private equity saw a gain, rising to 9.6% from 9.5%.
Elsewhere, debt securities declined to 9.9% of the portfolio from 10.8%; Australian equities dropped to 8.2% from 8.8%; infrastructure and timberland fell to 6.8% from 7.4%; hedge funds slipped to 13.7% from 14% and real estate edged down to 6.2% from 6.3%.
Non-domestic equities held steady at 30.4% of the portfolio.