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Report from the Chairman

The Future Fund was created to strengthen the Commonwealth’s long-term financial position.

In pursuit of that objective, 2018-19 was a good year with the Fund delivering a return of 11.5% or $16 billion.

The contributed capital of $60.5 billion has now earned over $102 billion in the Fund, taking the Future Fund to a total of $162.6 billion.

The capital and earnings are owned by the government and, ultimately, the citizens of Australia.

The Future Fund is a long-term fund. Over 10 years the Fund has achieved a return of 10.4% per annum, exceeding its benchmark of 6.5% per annum. This return is particularly impressive on a risk-adjusted basis given the level of risk taken by the Fund.

Since the Future Fund was established, the Board of Guardians has been highly disciplined in balancing its risk and return objectives as it invests on behalf of future generations of Australians.

This prudent approach has delivered strong long-term returns and remains the cornerstone of all investment decisions the Board makes.

In addition to the Future Fund, the Board also invests an additional five public asset funds on behalf of future generations of Australians.

The Medical Research Future Fund, which is designed to generate earnings to support grants to support medical research and innovation, continues to perform well. Since inception, the Fund has delivered a return of 4.5% per annum, exceeding its target return of 3.0% per annum.

The DisabilityCare Australia Fund and the two Nation-building Funds also performed as intended. The Aboriginal and Torres Strait Islander Land and Sea Future Fund (ATSILS Fund) was established in February 2019 and is in an initial transition phase. The Board is developing a long-term investment strategy for the ATSILS Fund.

The addition of new portfolios to the Board’s responsibilities is an important statement of the confidence and trust placed in the Board and reflects the strength of the Future Fund as an investment institution.

At 30 June 2019 the Board of Guardians invests over $198 billion across the six public asset funds.


The first half of the financial year was characterised by volatile markets as concerns regarding the trade dispute between the US and China and other geopolitical issues came to the fore.

This led to a period of monetary policy easing by central banks which, together with market expectations of further easing and continued global economic growth, has supported strong asset returns in the second half of the year.

In the longer term the global economy will face structural challenges including demographic shifts and high levels of debt.

The Board continues to see long-term returns as unlikely to replicate the strong returns of recent years and is cautious of the risks for investors.

In this uncertain environment the Board is maintaining its patient long-term approach to investment.


In November 2018 the responsible Ministers appointed John Fraser to the Board of Guardians. John brings with him significant experience in investment management and corporate governance.

Also in November, I was reappointed for a second term as Chairman and John Poynton AO for a second term as a Board member, with effect from February 2019.

Following the end of the financial year, in July 2019 the Government made a $7.8 billion contribution to the Medical Research Future Fund. This is a significant inflow which will be invested in line with the Fund’s mandate.

On 1 September 2019 the assets of the Building Australia Fund were transferred to the newly created Future Drought Fund, which the Board of Guardians will manage.


On behalf of the Board of Guardians, I thank the responsible Ministers for their continued support.

I thank my fellow members of the Board of Guardians, who each contribute a wealth of expertise and skill to the Board and its Committees.

Finally, I acknowledge and thank the staff of the Future Fund Management Agency, led by David Neal, for their hard work and dedication.

Hon Peter Costello AC

Future Fund Board of Guardians