THE Future Fund has notched up its first positive returns for this financial year in the March quarter, as markets picked up after European central banks pumped more money into economies.
The fund held $77 billion at March 31 and reported a 5.4 per cent return for the quarter, according to its latest portfolio update. This compares with a median superannuation fund return of 5.72 per cent in the March quarter, according to figures compiled by SuperRatings. Future Fund returns for the financial year to date were 2.2 per cent, compared with median returns of 1.98 per cent.
In the first three months of this year, fund managers bought an additional $2.2 billion of equities in developed markets. Cash holdings decreased by $1.5 billion, with the fund now holding 11.1 per cent cash, down from 13.8 per cent at the end of 2011.
The latest quarterly update on the fund's performance and strategy was also the first to be presented by a general manager. It was previously delivered by former chairman David Murray.
"The market falls of the first half have been reversed as central banks took steps to provide greater monetary accommodation and investor sentiment improved," general manager Mark Burgess said in a statement accompanying the update.
The bulk of assets were still in equities, debt and alternative assets, but the latest quarter marked the first time the fund had no more than 20 per cent allocated to any single asset class.
"Given the fund's mandate, maintaining a long-term perspective and ensuring adequate diversity in the portfolio is important during this period of market volatility," Mr Burgess said. "We continue to construct a portfolio designed to generate good returns while avoiding excessive risk."
Mr Murray was replaced by David Gonski on March 13, following a government appointment process that spilled into the public arena after board members criticised ministers for appointing an outsider, rather than a sitting board member.
The fund started in late 2008 with $60.5 billion, including $9.2 billion worth of Telstra shares.