THE Future Fund outperformed the average Australian superannuation fund last financial year, thanks to a quarter of strong growth.
The government-owned fund reached a historical peak of $77 billion in March after growing 5.4 per cent in the first three months of the year. It lost $37 million in the June quarter and in the first half of the financial year, but still finished with annual return of 2.1 per cent. The median balanced superannuation fund returned just 0.4 per cent and the top quartile of funds returned 1.1 per cent in 2011-12, according to SuperRatings.
However, the Future Fund is not directly comparable to super funds because it has the sole purpose of covering the government's pension liabilities for public servants and the Defence Force after 2020.
The latest portfolio update shows the Future Fund has just a third of its money sitting in the sharemarket, with managing director Mark Burgess pointing out there was still unresolved issues affecting confidence in global markets.
The fund has reduced its cash holding to just over 10 per cent of its $77 billion assets, while increasing slightly its investments in private equity, property and timberland assets.
The fund cut its investment in emerging markets from $4.2 billion at March 30, to $3.8 billion and cut its investment in Australian shares from $8.4 billion to $7.9 billion by June 30. It has $13.4 billion in developed markets, or 17.5 per cent of total assets.
"During the financial year investment markets were challenging as the situation in Europe and the US, combined with slowing growth in emerging markets, resulted in market corrections," Mr Burgess said in a portfolio update.
The single biggest allocation of $14.6 billion is in alternative assets managed by a range of international hedge funds, commodity traders and other fund managers, mostly located in England and the US.