A portfolio update for the Future Fund showed that returns for the fund leading to 31 March 2014 have been 11.2 per cent per annum for five years and 9.3 per cent per annum for three years, exceeding the baseline long-term target of 7.1 per cent.
In the financial year to 31 March 2014, the fund has generated a 9.8 per cent return, while the return for the March quarter was 1.1 per cent.
Future Fund chief investment officer David Neal said the portfolio of the fund was “well diversified, striking an appropriate balance between the long-term return and risk requirements of the mandate”.
“The portfolio has benefited as markets have continued to respond to policy efforts to lift economic activity,” said Mr Neal. “Markets are relatively buoyant and valuations across most sectors are now looking fairly full.”
Mr Neal said the fund is continuing to assess a range of scenarios with policy settings in economies around the world evolving.
“Overall, we feel that the current settings of the portfolio are suitable, providing the potential for strong returns should the market environment remain healthy, while balancing this with some protection against the potential for weaker markets,” said Mr Neal.
"At the same time, we are focused on continuously reviewing our portfolio against the best available opportunities and adjusting the portfolio as appropriate.”
Mr Neal said while recent rates of return have been strong, sustainable future returns “need to be underpinned by improved economic growth”.
In terms of the Nation-building Funds, the value of the Education Investment Fund was $3,870 million at 31 March 2014, the Building Australia Fund stood at $4,086 million and the Health and Hospitals Fund was $2,470 million.
In the 12 months leading up to 31 March 2014, the Building Australia Fund generated a return of 3.3 per cent, while the Education Investment Fund and Health and Hospitals Fund both produced a return of 3.2 per cent.
All three exceeded the target benchmark return of 3.1 per cent.
