Raphael Arndt

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 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.

The Future Fund pulled some of its new portfolio levers to mitigate the financial damage seen through 2022, but it doesn’t expect markets to get much better anytime soon.

The Future Fund’s unbroken run of robust returns is about to the face a tough new investment paradigm. A stronger bent to “skill-based investments” might help them weather the storm. There’s a strong argument for the Future Fund being one of the wonders of the investing world. Seeded with $60 billion 13 years ago, it’s…