Australia’s sovereign wealth fund tops A$252 billion, reduces US portfolio

Australia’s sovereign wealth fund, the Future Fund, said on Tuesday (Sep 9) that its valuation had reached A$252 billion (S$213.2 billion) as it pared back its US market exposure to boost investments in Germany and Japan.

The fund delivered a 12.2 per cent return in the year ended Jun 30, which the Future Fund said was double its government-mandated target of 6.1 per cent.

The portfolio update for the June quarter showed the Future Fund now had A$65.1 billion invested in developed markets, accounting for a quarter of the fund’s total investments. It was up from A$46.8 billion at the same time in 2024.

The Future Fund’s Australian equity investments stood at A$27.2 billion, up from A$23.1 billion.

Future Fund chief executive officer Raphael Arndt said while the US remained the fund’s largest international investment recipient, volatility and political uncertainty there had prompted a paring back of exposure.

“The government there is making changes to the regulatory structure with tariffs and changes to taxation. That is something we are watching closely, and the budget is not balanced and there’s no plans to balance it,” he told reporters.

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“These are risks we have to take into account, and we have made the decision to modestly reduce our US exposure and diversify the portfolio.”

The Future Fund does not publish a breakdown of its investments other than providing an update on the valuation of each asset class.

“The areas which look most interesting to us are continental Europe, particularly Germany, with some of the announcements that the government has made about stimulating and investing in its economy,” Arndt said.

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“We have been moving money for quite some years to Japan, and both those markets seem somewhat cheaper than US or Australian equities markets.”

The Future Fund’s property investment portfolio was reduced from A$12 billion to A$11.1 billion and its credit investments were worth A$22.4 billion, down from A$24.8 billion last year.

Arndt said the fund raised its exposure to developed market currencies and commodities, including gold. REUTERS