OPINION: The Future Fund says its returns better reflect the pain in private markets in the 2022 financial year. And it says super funds must prepare for a new world.
Future Fund chairman Peter Costello came in all guns blazing on Wednesday morning as he announced the
And, in defending the Future Fund’s returns, Costello effectively took a shot at the numbers the superannuation sector posted for financial 2022, and particularly the way the funds have reflected the volatility in private assets, such as private equity, venture capital, infrastructure and property. But the pain in private asset valuations might not be done; Arndt says there is both a lag effect and a smoothing effect in private capital valuations compared to equity markets.He argues the large unprofitable tech companies that have seen their share prices hit so hard on public markets “tend to be much more volatile than earlier-stage private equity and growth private equity, which is the bulk of our portfolio. We think that our valuations reflect the market.
Arndt said the macro hedge funds with which the Future Fund invests returned 20 per cent in 2022, with several individual macro hedge funds returning more than 40 per cent.“We think skill [and] alpha strategies are really valuable and so, for us, that continues to be venture and private equity, private infrastructure, property and, in particular, macro hedge funds because we think they can do really well in an environment where equities are falling and inflation is rising,” he says.
The minus 1.2 per cent return delivered in 2022 was a long way off the Future Fund’s target rate of 10.1 per cent; Costello acknowledges the CPI-linked target was “not written for periods of high inflation”, and may have to change if the world is in for “long periods of double-digit inflation or anything like that”.Arndt says the Future Fund has one thing in its favour that some super funds might not: it has adjusted early to this new world order.
Australia Latest News, Australia Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
From new phones to future farms, this tech crunch is causing headachesFarmers turn to technology amid an ongoing worker shortage, but upgrading the farm may not be easy with a global shortage of one small piece of equipment.
Read more »
Albanese government ‘resolved’ on creating a ‘better future’Prime Minster Anthony Albanese says his government is “resolved on the destination of a better future” as he marks 100 days in office. “I recognise that we're facing challenging times right now. I know a lot of people are doing it really tough,” Mr Albanese said in an address to the National Press Club on Monday. “But I'm optimistic about our country. I believe in the Australian people and I'm energised by the work of building a better future.” Mr Albanese said his government has “hit the ground running” on matters including energy, floods, biosecurity, defence and climate change.
Read more »
As he prepares for his UFC return, Robert Whittaker faces an uncertain futureRobert Whittaker is still one of the best middleweights in the world, but that's why the former champion faces an uncertain future as he prepares for his UFC return.
Read more »
Tax cut debate sells the country, the economy and the future shortThe debate over a six-year-old tax package that won’t be in place for another two years highlights the dearth of real tax debate that Australia needs. | Shane Wright | ANALYSIS auspol
Read more »
Venus Williams quiet on her future after first-round exit from US OpenThe two-time champion was beaten 6-1, 7-6 by Alison van Uytvanck and said: ‘Right now, I’m just focused on the doubles’
Read more »
We’ll get $45b future frigates into the water on time, Marles vowsAustralia’s troubled $45 billion future frigate project will deliver the Navy’s Hunter Class warships on time, Defence Minister Richard Marles has pledged as he visited shipbuilder BAE’s docks in Glasgow.
Read more »