Australia's Future Fund said Monday its investment holdings slipped 1.5% to A$200.7 billion ($150.8 billion) over the three months ended March 31, amid rising inflationary pressures and tumbling global equity markets.
The fund's investment gains for the 12 months through March 31 came to 11.8%, still exceeding its 9.1% return target of 4 to 5 percentage points above Australian consumer price inflation but by a much narrower margin than the prior quarter. For the 12 months ended Dec. 31, the Future Fund reported a 19.1% investment gain, handily besting a target return of 7.5%.
CEO Raphael Arndt said in a news release the fund's portfolio is positioned to navigate a challenging investment environment. "Our alternatives strategies are designed to perform in all market environments and we have added to those," he said, warning that returns will be harder to come by going forward.
The Future Fund, meanwhile, has continued to reduce risk exposures, with a portfolio Mr. Arndt described three months ago as positioned with a neutral risk setting now "moderately below" neutral.
That reduction in risk wasn't immediately obvious from the fund's latest asset allocation figures, which showed combined equity exposures relatively flat, cash holdings down and allocations to hedge funds up.
The fund's emerging markets equity allocations dropped to 6.1% of the portfolio by the end of March from 7.7% three months before but developed markets exposures rose to 16.3% from 15.7% and Australian equity holdings climbed to 8.5% from 7.6%.
Taken together, equity allocations came to 30.9% of the portfolio, similar to 31% three months earlier.
Cash holdings, meanwhile, dropped to 15.1% from 16.8%, while allocations to hedge funds rose to 15.2% from 14%.
"We continue our work to identify opportunities to access value from less liquid and more skill-based investments, and working our relationships with our partners to identify more focused opportunities both to secure returns and to manage risk," said Mr. Arndt.
For the quarter ended March 31, private equity exposures held steady at 16.8%; property allocations slipped 0.2 percentage points to 6.3%; infrastructure and timberland rose 0.2 percentage points to 8.2% and debt securities — predominantly private credit — rose to 7.4% from 7%.
Mr. Arndt couldn't immediately be reached for further comment.
