Australia’s Future Fund has smashed its investment target, delivering a 12.2 per cent return to send the nation’s sovereign wealth fund above $250 billion for the first time.
The bumper result for 2024/25 exceeded the fund’s mandate of 6.9 per cent per year and came despite significant global economic and geopolitical uncertainty, including US President Donald Trump’s “liberation day” tariff shock.
The total value of the Future Fund increased by $27.4 billion to $252.3 billion, more than four times its value at inception in 2006.
It was established by then-Liberal treasurer Peter Costello after the sale of Telstra to strengthen the Commonwealth’s financial position and cover the costs of burgeoning public-sector pension payments.
No money has yet been withdrawn from the fund.
Future Fund chief executive Raphael Arndt said the strong return was a result of changes made since 2021 to increase the portfolio’s structural risk levels and resilience, including by increasing exposure to gold and developed market currencies.
The fund also manages several subsidiary funds including the Medical Research Future Fund valued at $24.5 billion, the $10.9 billion Housing Australia Future Fund, the $17.7 billion DisabilityCare Australia Fund and the $4.9 billion Disaster Ready Fund.
Total funds under management swelled to $318.1 billion, while $3.9 billion was paid out towards the various subsidiary fund programs.
Fuure Fund board chair Greg Combet said the result reflected its portfolio repositioning in anticipation of “profound changes” in global trading conditions.
“We have achieved these returns whilst also making significant investments into the Australian economy consistent with the national priorities in our new Investment Mandate,” he said.
The federal government in 2024 updated the fund’s investment mandate, requiring it to support “national priorities” including boosting housing supply and accelerating the clean energy transition, where consistent with delivering strong returns.
“The fund uplifted its investment in CDC, the largest data centre developer and operator nationally, ensuring capital support for the productivity growth that will be driven by AI,” Mr Combet said.
“It will also drive demand for renewable energy and storage.”
The fund acquired a 10 per cent stake in electricity grid operator Transgrid and invested in student accommodation to support Australia’s housing and infrastructure needs, Mr Combet added.
A delighted Treasurer Jim Chalmers congratulated the fund’s board and staff for the “outstanding results”.
“This result is a powerful demonstration of the role the Future Fund is playing investing in national priorities and delivering very strong returns,” he said.
“Strong returns like these will and should always be the highest priority of the fund but this demonstrates how consistent that can be with investing in Australia’s national economic priorities where that’s responsible and appropriate.
“This vindicates our investment mandate because it shows maximising returns is entirely consistent with modernising our economy for the future.”
The coalition vowed to overturn the government’s new mandate when it was announced, arguing the nation’s nest egg should not be raided to invest in the treasurer’s “pet projects”.
“These results prove them wrong,” said Finance Minister Katy Gallagher.
“Responsible, future-focused investments are not only delivering for the economy today but are also helping to modernise Australia and set us up for sustained growth and security in the years ahead.”