Future Fund boss Raphael Arndt is determined to keep moving with the repositioning of the fund for a higher inflation, lower return world.
“We actually took our own advice, and we started to move the portfolio around at that time and even earlier,” Arndt explains.
The fund has also reduced its exposure to certain currencies, to interest rates and, at least until recently, to bonds.“This was all about starting to build inflation resilience into the portfolio. We’ve still got aspirations to continue to grow that,” Arndt says. The Future Fund has been explicit about its view that alpha will become more important in a low-return environment, and Arndt says it will continue to hone its strategies for finding the best investment managers it can.
Arndt’s key message is that the fund needs to keep moving and innovating to keep fighting inflation. Stagflation is not the fund’s central case, “but it’s a real scenario to worry about, and it’s an incredibly bad scenario for long-term investors”. Arndt says low unemployment, strong household and corporate budgets, and reasonable GDP growth support that normalisation.
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