The Future Fund is Australia’s sovereign wealth fund that is responsible for investing for the benefit of future generations of Australians. It is the country’s largest pension manager and is ranked 32nd largest globally. It was established in 2006 to strengthen the Commonwealth’s long-term financial position and today manage five public asset funds. The sole purpose is to generate high, risk-adjusted returns over the long-term. The fund operates independently from Government and has its own investment mandate despite being an intergenerational sovereign wealth fund,  not a superannuation fund. It basically is designed to allow the Australian Government to save today to meet its future liabilities for the payment of superannuation to retired civil servants of the Australian Public Service. The Future Fund Board is also responsible for five other Nation-Building Funds which include: Building Australia Fund – To improve and create major infrastructure projects. Health and Hospitals Fund – To provide increased spending on hospitals and medical equipment. Education Investment Fund – To provide capital investment in higher education and vocational education and training. DisabilityCare Australia Fund – To fund the National Disability Insurance Scheme. Medical Research Future Fund. How does it invest The Fund invests its assets of each of the above mentioned five funds in line with its individual investment mandate and strategy. Each fund is unique, so it requires a tailored approach to investing its assets. The Future Fund and the Medical Research Future Fund invest in a diversified portfolios with a long-term investment horizon. The DisabilityCare Australia Fund and the Nation-building Funds have shorter-term investment horizons. Performance The last portfolio update was on the 1 February 2018. The Future Fund grew to $139bn returning 8.1% pa exceeding the benchmark target of 6.8% pa over 10 years. The Fund continues to perform strongly and is well positioned for this year’s global outlook. Hon Peter Costello AC, Chair of the Future Fund Board said, “The global growth outlook improved through the year supported by synchronised growth in America, Europe, and Japan. Unemployment is falling but inflation is still contained and low. A number of the risks we have been cautious about for some time have receded. Given the positive near-term outlook, we have modestly increased the Fund’s risk levels. Despite the recent buoyancy, in the longer term, the global economy continues to face structural challenges including demographic shifts and high levels of debt and we expect long-term prospective returns to be lower relative to history. Although markets are currently optimistic, the easy monetary policy that has driven this environment is coming to an end. As interest rates around world rise towards more normal levels, we expect to see downward pressure on asset prices. Our strategy is designed to allow us to benefit from stronger markets while avoiding excessive risk.” With close to $140bn in FUM, the Future Fund is one of the largest sovereign wealth funds in the world and has managed a respectable 7.8% pa since inception. It managed an 8.8% return for the year to December, beating its own target as it moved out of cash and into alternatives, global equities, and private equity. The benchmark returns are 6.8% and its target return was lowered from CPI + 4.5%-5.5% to CPI plus 4%-5%. Its cash dropped to $21.1bn from $25.2bn which was 15.2% of total assets. Difference between Future Fund The fundamental difference between the Future Fund…

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