Australia's Future Fund returned 1.4% in the quarter and 8.6% in the year ended March 31, bringing assets up to A$141 billion ($108.4 billion).
The Melbourne-based sovereign wealth fund's one-year return exceeded its target of 5.8% for the year ended March 31. Meanwhile, its annualized return of 10.6% for the five years ended March 31 is well above its target of 6.3% for the same period. Its 10-year return was 8.5%, vs. 6.7% for its target, according to a news release.
Peter Costello, chairman of the board, said in an emailed statement that although "sustained economic growth across the major advanced economies is positive for the near term … the longer-term outlook remains challenging." Mr. Costello noted that global interest rates "are poised to begin rising as the world works through surplus capacity."
David Neal, the fund's CEO, added in the same statement that the fund has "modestly increased risk" over the past few quarters "in light of the positive shorter-term economic outlook."
Mr. Neal added that the fund's "private equity program continues to play an important role" in its portfolio, and that it continues "to diversify the medical research future fund portfolio." The fund also has an allocation to real estate — currently at 5.8% — that will grow over time.
For the latest quarter, the fund's allocation to developed markets equities rose to 19.5% of the portfolio as of March 31 from 18.6% as of Dec. 31. Alternatives, meanwhile, made up 15.5% of the fund, up from 15.3%.
Cash holdings, on the other hand, fell to 14.8% from 16.4%. Private equity made up 12.8% of the fund, up from 12.1%. The fund's private debt-focused fixed-income allocations rose to 10% from to 9.6%.
Also, for the latest quarter, the fund's allocation to infrastructure and timberland inched up to 7.8% from 7.7%, while emerging markets equities dropped to 7.5% from 7.8%. Australian equities dipped to 6.3% from 6.4%, and real estate slipped to 5.8% from 6.1%.
