Future Fund continues increasing alternatives exposure

The Australian sovereign wealth fund continues to increase its exposure to real estate, private equity and infrastructure, according to its Q1 2011 portfolio update. Future Fund’s infra and timberland assets increased by A$562m in the first three months of the year.

Australia’s Future Fund made further increases to its real estate, private equity and infrastructure portfolios in the first quarter of 2011, the sovereign wealth fund has said in a portfolio update.

Its overall assets grew in the three months to 31 March 2011 to A$74.62 billion (€54.9 billion; 81.1 billion from A$71.8 billion) with growth in alternative investments playing a significant part.

In the first three months of the year, the Future Fund increased its real estate portfolio by 0.6 percent or A$632 million to A$4.45 billion, equivalent to 6.1 percent of its overall assets; the value of its private equity holdings grew by 0.3 percent or A$329 million to A$2.49 billion, equivalent to 3.4 percent of total assets; and the value of its infrastructure and timberland assets increased by 0.5 percent or A$562 million to A$3.51 billion.

Future Fund has continually been increasing its exposure to alternative assets in recent years.

The fund, which was established in 2006 to assist the Australian government in meeting the cost of public sector superannuation liabilities, said in its 2009/2010 annual report that it aimed to increase its exposure to alternatives, which it dubbed ‘tangible assets’ to 14.5 percent by 30 June, 2011.

As of the end of March, its real estate, private equity, infrastructure and timberland assets totalled 14.3 percent, just 0.2 percent shy.

The fund’s board of guardians said in its portfolio update: “Over time, [Future Fund] will continue to build towards its target asset allocation, with further investments into private equity, property and infrastructure in particular.”

Future Fund said in the update that it had returned 3.9 percent from its portfolio during the first quarter, excluding its investment in Telstra, the Australian telecommunications company, in which it has recently reduced its stake from around the 20 percent mark to less than 5 percent.