Govt reduces Future Fund target return parameters
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.
Recommended for you
Almost 70 per cent of asset managers are planning to control costs via product rationalisation, according to a global survey by Northern Trust, as they seek to offer clients a best-in-class experience.
Fund managers should work collaboratively with data providers to minimise greenwashing risks in their products as a positive ESG score can be a “gamechanger” for a fund’s demand with advisers.
Asset manager Janus Henderson has made two acquisitions in the ETFs and emerging markets space as it takes strategic steps to meet client needs.
Self-reporting issues to ASIC could lead to a reduced charge for a fund manager but it may not exempt them from enforcement action altogether, according to ASIC chair Joe Longo.