Future Fund

TPA is an “uncommon and demanding” approach to running an investment organisation, according to the Future Fund, but a rewarding one – as long as institutions that take it up know that it’s not a transformation that should be embarked upon lightly.

The return of the Future Fund to active equity management has seen it dip its toes into Japanese equities as decades of low growth and corporate stagnation comes to an end.

A panel of experts has pointed to energy, illiquid assets and retirement income as three areas where super funds need to lift their game, with stakeholders expecting the “huge amount of capital” now in the system to contribute to Australian society.

The outgoing chair of Australia’s sovereign wealth fund has come out swinging against “self-styled experts” with “foolhardy schemes” to spend the $200 billion it manages, warning that winding up the Future Fund will leave the government – and future generations of Australians – worse off.

Just like the Future Fund, the recipient of its first active equity mandate since 2017 thinks markets are going to look pretty different over the next decade. And asset management businesses themselves are going to have to do things differently to keep up.

Calls to liquidate the Future Fund and use the proceeds to pay down government debt have grown louder in recent weeks but doing so won’t come without a cost according to analysis from WTW.

Changing dynamics in the Australian asset management industry gave the Future Fund access to a manager it might ordinarily have been forced to walk away from, and it expects to find plentiful (and sustainable) alpha in small caps.

The Future Fund might make a bigger contribution to the budget if it was liquidated, according to the Centre for Independent Studies, which argues that its returns haven’t been that impressive even as its benchmark gets harder to beat.

Australia’s sovereign wealth fund and New Zealand Super have topped this year’s Global SWF governance, sustainability and resilience rankings, while institutions the world over are rethinking their investment strategies amidst market ructions.

The Future Fund is thinking of restarting its active equity programs with investments in small caps, according to CEO Raphael Arndt, but commentators are split on whether it will find the returns it needs.