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Report from the Chief Executive Officer

We are very pleased with the investment performance of the funds under our management over more than a decade.

More pleasing still is that these strong returns have been generated whilst limiting the level of risk in the portfolio. We have kept a sharp focus on the specific investment mandates provided to us by the government for each of the funds we manage. This approach targets an appropriate level of risk and seeks to extract as much return as possible for that risk by a careful, thoughtful portfolio construction and an intense search for opportunities to add value by our talented and dedicated team.

Our investment activity this year has remained disciplined, with a continued focus on managing the flexibility and liquidity of the portfolio. In an increasingly uncertain and challenging environment the ability to adjust the portfolio to shifts in the market environment may well be paramount.

The number and value of funds we manage continue to grow, adding greater responsibility and complexity to our task. To sustain our success into the future we need the organisation to be in the best shape it can be. In 2018 we refined our structure to strengthen our collaborative approach and help us to be more nimble and streamlined in the hunt for investment opportunities, the management of risk and the development of strong enabling technology. Supported by great energy and commitment from across the team, together with a number of new key hires, we are delighted with the way the new structure has been bedded down over the last year.

The organisation has been a hive of activity building our investment data and analytics capabilities and improving our technology more broadly. The benefits of these projects are now starting to flow with improved access to better quality data in a more timely manner, all built on a more resilient and flexible technology infrastructure. A number of other exciting projects are nearing completion that will further transform our management of data and provision of analytics.

Whilst the completion of these projects is leading to a significant improvement in the quality of our investment technology, we believe that the role technology can play in adding value to our processes and ultimately our portfolios is profound. At its heart, the Future Fund’s task is to transform data into information into insights and ultimately into portfolio value creation. Given the scale and complexity of this task for a large portfolio diversified across geography, asset class, manager and structure, technology is a key enabler.

To lead our ongoing efforts in this space we were pleased to welcome Richard Large to the newly created role of Chief Technology Officer in February 2019. Richard is focused on developing our long-term technology strategy, ensuring that we have the capabilities and systems needed to take us into the next decade.

Last year we strengthened our investment leadership team, promoting David George and Wendy Norris as Deputy Chief Investment Officers for public and private markets respectively, reporting directly to Raphael Arndt as Chief Investment Officer. Completing the senior investment leadership team we were delighted to welcome Sue Brake as Deputy Chief Investment Officer, Portfolio Strategy. Together, Raphael, Wendy, David and Sue are focused on further strengthening our joined-up, collaborative approach to investing.

Looking across the organisation more broadly, leadership will be a critical factor in our future success. We have been focussing on uplifting our leadership capability as we push ourselves to collaborate more effectively and make better investment decisions. This will continue to be a focus into the years ahead.

Finally, we made good progress in developing our newly created dedicated risk function, which brings together our existing operational and investment risk teams. During the year, the Risk Team has reviewed and designed a revised Risk Management Framework that supports risk management as an enabler and value add towards achieving our vision and strategic priorities.

In summary, we’ve had a lot to keep ourselves busy with in 2018-19. I’m excited about the challenges and opportunities facing us in the year ahead as we strive to build on the success we have achieved to date.

Vale Paul Costello

Of great sadness to many of us at the Future Fund and across the broader industry, Paul Costello, the founding Chief Executive Officer of the Future Fund, passed away in November 2018.

Paul, in many ways, was the father of our successful culture at the Agency and a friend and mentor to me and others. His legacy lives on strongly here and will continue to do so for many years to come.

Acknowledgements

Thank you to the Chairman and the Board of Guardians for their continued support and guidance.

I also thank my extraordinary team at the Future Fund Management Agency for their effort and dedication across a very busy year. Every team across the business plays an important role, working together tirelessly as one team to deliver strong, long-term returns for the benefit of future generations of Australians.

I look forward to another busy and productive year ahead.

David Neal

Chief Executive Officer
Future Fund Management Agency