Statement by David Neal, Chief Executive Officer of the Future Fund to the Senate Finance and Public Administration Committee
On Friday, 19 October we tabled our 2017-18 Annual Report in Parliament. The Report provides a comprehensive overview of the performance of our five public asset Funds and the operation of our organisation in the 2017-18 financial year.
We have made good progress in the pursuit of our objective to strengthen the Commonwealth’s long-term financial position.
In 2017-18 the Future Fund returned 9.3%, adding over $12bn to the value of the Fund.
Yesterday we released our portfolio update for the first quarter of this financial year.
At 30 September 2018 the Future Fund had generated a 10-year return of 9.2% pa, exceeding its target return of 6.5% pa.
The Future Fund now stands at $149bn. Since the Fund was established in 2006 with capital contributions of $61bn, it has earned $88bn for the Australian Government.
The Medical Research Future Fund, DisabilityCare Australia Fund, Building Australia Fund and the Education Investment Fund are all performing in line with their respective investment mandates.
In total across the five funds, the Future Fund Board of Guardians now invests $181bn for the benefit of future generations of Australians.
In terms of investment conditions, our view is that the nearer term outlook is reasonably positive. However, we remain cautious about the longer term outlook, the lower return environment that we expect to see and the potential for shocks to markets.
In this context, our portfolio construction continues to emphasise diversification and flexibility.
The Board recognises the responsibility and the challenge of managing over $180bn on behalf of the Commonwealth, particularly in a complex investment environment. Accordingly, we are investing in a range of projects to enhance our systems and processes, which will help us to sustain our strong performance into the future.
I welcome your questions.