Each fund we manage has an investment mandate that is determined by the Australian Government under legislation.
We have no role in determining the projects and initiatives that are supported by drawdowns out of the various funds. Our sole responsibility is to invest the funds.
The Future Fund was established in 2006 to strengthen the Australian Government’s long-term financial position.
The Fund received contributions from a combination of budget surpluses, proceeds from the sale of the Government’s holding of Telstra and the transfer of remaining Telstra shares.
Until 30 June 2017 the Investment Mandate for the Future Fund was to achieve an average annual return of at least the Consumer Price Index (CPI) + 4.5% to 5.5% per annum over the long term with an acceptable but not excessive level of risk.
From 1 July 2017 the long-term benchmark return target was reduced by the responsible Ministers to CPI + 4% to 5% per annum, reflecting the changed investment environment. The return objective must continue to be pursued with acceptable but not excessive levels of risk.
While legislation permits drawdowns from the Future Fund from 1 July 2020, the Government announced in the 2017-18 budget that it will refrain from making withdrawals until at least 2026-27.
The expected continued growth in the portfolio as a result of this decision will considerably strengthen the Commonwealth’s position.
Withdrawals from the Future Fund, when they are made, will help the Australian Government to meet its obligations out of Consolidated Revenue (including defined benefit pensions) and thereby ease the pressure on government finances.
Medical Research Future Fund
The Medical Research Future Fund was established in 2015 to improve the health and wellbeing of Australians by providing grants of financial assistance to support medical research and medical innovation.
The Fund’s Investment Mandate is to achieve at least the Reserve Bank of Australia cash rate target + 1.5% to 2.0% per annum, net of investment fees, over a rolling 10-year term.
Payments from the Medical Research Future Fund for projects and initiatives are determined by the Australian Government in accordance with the Medical Research Future Fund Act 2015.
Aboriginal and Torres Strait Islander Land and Sea Future Fund
The Aboriginal and Torres Strait Islander Land and Sea Future Fund (ATSILS Fund) was established in February 2019 to enhance the Commonwealth’s ability to make payments to the Indigenous Land and Sea Corporation.
The ATSILS Fund was established with a capital contribution of $2 billion transferred from the Aboriginal and Torres Strait Islander Land Account.
The Fund’s Investment Mandate requires the Board to target an average return, net of costs, of at least the Consumer Price Index + 2.0% to 3.0% per annum over the long term while taking an acceptable but not excessive level of risk.
During the initial transition period, as the Future Fund Board of Guardians develops a long-term strategic asset allocation, the government anticipates a return lower than the benchmark return.
Payments from the ATSILS Fund will be managed in line with the Aboriginal and Torres Strait Islander Land and Sea Future Fund Act 2018.
DisabilityCare Australia Fund
The DisabilityCare Australia Fund was established in 2014 to help fund the National Disability Insurance Scheme (NDIS), which will support a better life for Australians with a significant and permanent disability and their families and carers.
The Fund will reimburse States, Territories and the Commonwealth for expenditure incurred in relation to the NDIS.
The Fund’s Investment Mandate sets a benchmark return of the Australian three-month bank bill swap rate + 0.3% per annum calculated on a rolling 12-month basis. Investments must minimise the probability of capital loss over a 12-month horizon.
Payments from the DisabilityCare Australia Fund are managed in accordance with the DisabilityCare Australia Fund Act 2013.
The Nation-building Funds, namely the Building Australia Fund and the Education Investment Fund, were established in 2008 to provide financing resources to help meet the Australian Government’s commitment to Australia’s future through investment in critical areas of infrastructure.
The Funds’ Investment Mandates set a benchmark return of the Australian three-month bank bill swap rate + 0.3% per annum calculated on a rolling 12-month basis.
The Mandates require that investments minimise the probability of capital loss over a 12-month horizon. The assets of the Nation-building Funds are invested in a combination of short- and medium-term debt instruments.
Payments from the Funds are determined by the Australian Government in accordance with the Nationbuilding Funds Act 2008.
Building Australia Fund
The purpose of the Building Australia Fund is to enhance the Australian Government’s ability to make payments in relation to the creation or development of transport, communications, energy and water infrastructure and in relation to eligible national broadband matters.
After year end the Building Australia Fund was abolished and its assets transferred to the Future Drought Fund when the Future Drought Fund Act 2019 came into effect on 1 September 2019.
Education Investment Fund
The purpose of the Education Investment Fund is to enhance the Australian Government’s ability to make payments in relation to the creation or development of higher education infrastructure, research infrastructure, vocational education and training infrastructure.
The Australian Government has announced its intention to abolish the Education Investment Fund and transfer the assets to a new fund, the Emergency Response Fund.