The Future Fund’s exposure to global equities surged by nearly 50 per cent in the September quarter, with the $60 billion-plus fund also seizing opportunities in debt securities and property as the proceeds from the Telstra sell-down and a reduction in cash holdings were spent.
Between 30 June and 30 September, the piggybank for Commonwealth public servant liabilities recorded an increase in developed market global equities from 13.4 per cent to 19.5 per cent of its ex-Telstra portfolio, or $7.3 billion to $11.7 billion.
Recent beneficiaries of the Fund’s bullishness on global equity markets are value managers Altrinsic Global Advisors, represented here by Ambassador Funds Management Services, and IronBridge Capital Management, one of the more successful ‘fly in, fly out’ managers whose cause locally has been helped by a place on the buy list of asset consultant JANA.
The Fund’s property exposure leapt from 1.4 per cent to 2.2 per cent of the ex-Telstra portfolio, assisted by its taking an interest in the ‘Bullring’ Birmingham shopping centre, an exposure to be managed by Henderson Global Investors. Interestingly, despite US media reports of the Fund recently sinking $1.1 billion into a Brookfield property vulture play, the manager is yet to show up on the Fund’s official list of managers.
The Fund’s ex-Telstra debt securities exposure rose from 23.1 per cent to 24.1 per cent, with recent highlights a reputed $1 billion mandate with US-based high yield manager Oak Hill Advisors.
Exposures to alternative assets and private equity both fell slightly, although US-based management buyout firm Hellman & Friedman joined the ranks of new managers for the Fund.
Meanwhile State Street Global Advisors picked up a passive developing market equities mandate, to complement its index-tracking allocation in the developed markets space.
Other highlights of the September 30 portfolio update were that the Fund has reached its highest level of assets under management since its July 2007 inception, $64.25 billion, and is also in the black since inception for the performance of the ex-Telstra portfolio, at 1.2 per cent.