The Australian government has announced a significant expansion of the Future Fund’s investment mandate, directing the A$230 billion ($150 billion) sovereign wealth fund to prioritize domestic projects in housing, energy, and infrastructure, Bloomberg reports.
This new directive, outlined in a statement of expectations released today, aims to leverage the fund’s considerable resources to address key economic challenges facing the nation.
Treasurer Jim Chalmers and Finance Minister Katy Gallagher emphasized the need for proactive investment in response to “major structural shifts” including the global transition to net zero emissions, technological advancements, demographic changes, and global economic fragmentation. They highlighted the Future Fund’s potential to capitalize on these opportunities.
The updated mandate requires the Future Fund to explicitly consider Australia’s national priorities when making investment decisions, focusing on boosting residential housing supply, facilitating the energy transition, and improving infrastructure. However, the government stressed that maximizing returns remains the fund’s primary objective.
The Future Fund, which recently reported an 11.9% return for the year ending September 30th, currently holds approximately 40% of its portfolio in local and global equities, around 10% in infrastructure and timberland, and over 40% in private investments.
The government’s decision to defer any withdrawals from the Future Fund until at least 2032-33, by which time it’s projected to reach A$380 billion, further underscores its long-term strategic vision.
Future Fund Chair Greg Combet welcomed the new mandate, stating that the government’s priority areas are “aligned with the Future Fund’s thinking” and consistent with its existing focus on increasing local currency exposure and inflation protection. This suggests a smooth integration of the government’s policy directives into the fund’s existing investment strategy.
