Australia’s Future Fund smashes growth target, eyes new investments

Investments in toll roads and student housing added a hefty $26 billion to Australia’s sovereign wealth in 2024.

The 12.2 per cent return on The Future Fund was well in excess of the 6.4 per cent mandated target and brings the 10-year return to 8.1 per cent, the fund’s Board of Guardians announced on Wednesday.

Since its establishment in 2006, investment returns have added $177 billion to put the fund at a record $237.9 billion in value.

“This was a strong result that reflects the work we have done over the past few years ... to understand significant and lasting changes in the world,” chief executive Raphael Arndt said.

New investments made by the fund during 2024 included a stake in Melbourne’s Eastlink toll road and a national portfolio of student accommodation facilities.

Strength in investments in the United States also drove growth in value.

“This was an extremely pleasing result driven by the strength of the US economy,” chief investment officer Ben Samild said.

“Inflation has moderated and economic growth, trade, employment, wages and corporate balance sheets remain in good shape, underpinning another strong year for the US share market.

“These conditions provided lots of opportunities for active return generation and the Future Fund benefited from increasing its allocation to international equities.”

The weakness of the Australian dollar boosted the fund by increasing the value of offshore assets.

In one of the biggest changes to the fund since its inception, the government in November updated its investment mandate to require it to consider investments in “national priorities”, including renewable energy and housing.

Investment returns also helped increase the value of the six other funds managed by the board by 10 per cent to $66.7 billion.

The Future Fund was founded in 2006 with an initial contribution of $60.5 billion, derived from government surpluses and income from the privatisation of Telstra.