Future Fund’s PE portfolio grows by $1.9bn

Australian sovereign wealth fund Future Fund saw a boost of A$2.6 billion ($1.9 billion; €1.6 billion) in its private equity portfolio as of end-June 2018 compared with the previous quarter, increasing the portfolio weight from 12.8 percent to 14.1 percent.

The increase in exposure to private equity investments was largely the result of the US dollar’s recent appreciation relative to the Australian dollar, Future Fund chief executive David Neal said in a portfolio update briefing on Wednesday.

The A$146 billion investor’s private equity capital is primarily deployed through co-investments in venture capital and growth strategies. Among its GPs include Quadrant Private Equity, Apax Partners and Bain Capital, as well as China-focused CDH Investments and FountainVest Partners.

“We do think it provides us with exposure to parts of the economy and markets that you can’t access though the listed market,” Neal said.

He added that valuations in private equity were high, but they were “similarly high in other parts of the investment spectrum”.

On the current macro environment, the Future Fund remains concerned about a number of risks that would impact investment decisions such inflationary pressures in the US, rising interest rates globally, and international political and trade tensions, it said in a statement.

To prepare for the next decade, the Melbourne-based SWF expects to zoom into investment strategies focused on genuine innovation and value creation. In April this year, it backed the $225 million capital raise of Sydney-based venture firm Blackbird Ventures.

Future Fund had A$146 billion in assets under management as of this June, delivering a return of 8.7 percent per annum over the past 10 years.

The SWF expects to grow to more than A$200 billion over the next decade.