The Federal Government has empowered the Future Fund to trim it sails in the face of what is being predicted to be increasingly difficult global investment market conditions.
The Treasurer, Scott Morrison said the Government had registered a revised investment mandate for the Future Fund which would come into effect from 1 July this year, and reflecting changed global investment market conditions and outlook.
He said since its inception the Future Fund’s returns had grown to exceed the previous long-term target rate but added that actuarial analysis indicated global investment market conditions might make it increasingly difficult for the Future Fund Board of Guardians to achieve current returns without taking on excessive risk.
“We have therefore issued the Future Fund with a new investment mandate, which sets a target return of at least the consumer price index (CPI) +4 to +5 per cent over the long-term,” the Treasurer said. “This is a reduction in the target return of 0.5 per cent.”
Morrison noted that the Future Fund had performed strongly since being established in 2006, achieving returns of 7.7 per cent per annum, exceeding the benchmark return but said the Government supported the view that maximising returns must be balanced against the need to minimise the probability of losses to protect the taxpayer’s investment in the fund.
