Future Fund Investment Mandate Direction 2017

Part 1 Preliminary

1. Name of Direction

This Direction is the Future Fund Investment Mandate Direction 2017.

2. Commencement

This Direction commences on 1 July 2017, or on the 15th day after it is given to the Board, whichever occurs later.

^{Note: Section 42 of the Legislative Instruments Act 2003 (which deals with the disallowance of legislative instruments) does not apply to this instrument: see section 44 of that Act. Part 6 of that Act (which deals with the sunsetting of legislative instruments) does not apply to this instrument: see section 54 of that Act.}

3. Revocation of Previous Direction

The Future Fund Investment Mandate Direction 2014 is revoked in full.

4. Definitions

In this Direction:

Act means the Future Fund Act 2006.

Fund means the Future Fund.

Board means the Future Fund Board of Guardians.

responsible Ministers has the same meaning as in the Act.

5. Object of this Direction

The object of this Direction is to give guidance to the Board in relation to its investment strategy for the Future Fund. The Future Fund Board of Guardians is required under section 18 of the Act to seek to maximise the return earned on the Fund over the long term, consistent with international best practice for institutional investment and subject to its obligations under the Act and any directions given by the responsible Ministers under subsection 18(1) or subclause 8(1) of Schedule 1 of the Act.

This Direction is given under subsection 18(1) of the Act to articulate the Government’s expectations for how the Fund will be invested and managed by the Board.

Investments by the Future Fund will be confined to financial assets.

Part 2 Direction

6. Benchmark return

The Board is to adopt an average return of at least the Consumer Price Index (CPI) + 4 to + 5 per cent per annum over the long term as the benchmark return on the Fund.

In targeting the benchmark return, the Board must determine an acceptable but not excessive level of risk for the Fund measured in terms such as the probability of losses in a particular year.

7. Limits for holding of listed companies

The Board must establish a limit for holdings on any listed company in order to prevent a breach of the statutory limits imposed by sections 21 and 84C of the Act.

8. Board must consider impacts from its investment strategy

In undertaking its investment activities, the Board must act in a way that:

(a) minimises the potential to effect any abnormal change in the volatility or efficient operation of Australian financial markets; and

(b) is unlikely to cause any diminution of the Australian Government’s reputation in Australian and international financial markets.

9. Corporate Governance

The Board must have regard to international best practice for institutional investment in determining its approach to corporate governance principles, including in relation to its voting policy.

Medical Research Future Fund Investment Mandate Direction 2015

Part 1 Preliminary

1. Name of Direction

This Direction is the Medical Research Future Fund Investment Mandate Direction 2015.

2. Commencement

This Direction commences on the 15th day after it is given.

^{Note: Section 42 of the Legislative Instruments Act 2003 (which deals with the disallowance of legislative instruments) does not apply to this instrument: see section 44 of that Act. Part 6 of that Act (which deals with the sunsetting of legislative instruments) does not apply to this instrument: see section 54 of that Act.}

3. Definitions

In this Direction:

Act means the Medical Research Future Fund Act 2015. Board means the Future Fund Board of Guardians.

Board means the Future Fund Board of Guardians

Fund means the Medical Research Future Fund.responsible Ministers has the same meaning as in the Act.

responsible Ministers has the same meaning as in the Act

4. Object of this Direction

The Fund has been established to provide grants of financial assistance to support medical research and medical innovation over the long term.

The object of this Direction is to give guidance to the Board in relation to its investment strategy for the Fund. The Board is required under section 40 of the Act to:

• seek to maximise the return earned on the Fund over the long term, consistent with international best practice for institutional investment; and
• to enhance the commonwealth’s ability to provide grants of financial assistance to support medical research and innovation, subject to its obligations under the Act and any directions given by the responsible Ministers under the Act.

This Direction is given under subsection 39(1) of the Act to articulate the Government’s expectations for how the Fund will be invested and managed by the Board.

Part 2 Direction

5. Benchmark return

The Board is to adopt an average return of at least the Reserve Bank of Australia Cash Rate target + 1.5 to 2.0 per cent per annum, net of investment fees, over a rolling 10 year term as the benchmark return on the Fund.

In targeting the benchmark return, the Board must determine an acceptable but not excessive level of risk for the Fund measured in terms such as the probability of losses in a particular year. In determining the level of risk, the Board must take into account:

• the principle that the nominal value of the credits to the Fund be preserved over the long term; and
• the principle to moderate the volatility of the maximum annual distribution.

6. Board must consider impacts from its investment strategy

In undertaking its investment activities, the Board must act in a way that:

(a) minimises the potential to effect any abnormal change in the volatility or efficient operation of Australian financial markets; and

(b) is unlikely to cause any diminution of the Australian Government’s reputation in Australian and international financial markets.

7. Corporate Governance

The Board must have regard to international best practice for institutional investment in determining its approach to corporate governance principles, including in relation to its voting policy.

Aboriginal and Torres Strait Islander Land and Sea Future Fund Investment Mandate Direction 2019

Part 1 Preliminary

1. Name

This Direction is the Aboriginal and Torres Strait Islander Land and Sea Future Fund Investment Mandate Direction 2019.

2. Commencement

This Direction commences on the 15th day after it is given to the Board.

^{Note 1: Section 42 (disallowance) of the Legislation Act 2003 does not apply to the direction — see regulations made for the purposes of paragraph 44(2)(b) of that Act.}

^{Note 2: Part 4 of Chapter 3 (sunsetting) of the Legislation Act 2003 does not apply to the direction — see regulations made for the purposes of paragraph 54(2)(b) of that Act.}

3. Authority

This Direction is made under the Aboriginal and Torres Strait Islander Land and Sea Future Fund Act 2018.

4. Definitions

In this Direction:

Act means the Aboriginal and Torres Strait Islander Land and Sea Future Fund Act 2018.

Board means the Future Fund Board of Guardians established by section 34 of the Future Fund Act 2006.

Consumer Price Index means the All Groups Consumer Price Index number, being the weighted average of the 8 capital cities, published by the Australian Bureau of Statistics.

Fund means the Aboriginal and Torres Strait Islander Land and Sea Future Fund established by the Act. Future Fund Act means the Future Fund Act 2006.

Future Fund Act means the Future Fund Act 2006.

ILSC means the Indigenous Land and Sea Corporation established by section 191A of the Aboriginal and Torres Strait Islander Act 2005.

Responsible Ministers has the same meaning as in the Act.

Part 2 Direction

5. Object

(1) The object of this Direction is to give guidance to the Board in relation to its investment strategy for the Fund.

(2) The Board must seek to maximise the return earned on the Fund over the long term, consistent with international best practice for institutional investment, pursuant to section 33 of the Act, and subject to its obligations under the Act and any directions given by the Responsible Ministers under subsection 32(1) of the Act.

(3) This Direction is given under subsection 32(1) of the Act to articulate the Government’s expectations for how the Fund will be invested and managed by the Board. This sets out matters of risk and return for the Fund.

6. Benchmark return and acceptable level of risk

(1) The Board is to adopt an average return over the long term of at least the Consumer Price Index + 2.0 to + 3.0 per cent per annum, net of costs, as the benchmark return on the Fund.

(2) During the initial transition period, as the Board develops a long-term strategic asset allocation, the Government anticipates a return lower than the benchmark return.

Acceptable level of risk

(1) In constructing a portfolio, the Board:

(a) must determine an acceptable but not excessive level of risk for the Fund, including having regard to the plausible capital loss from investment returns over the forward three-year period; and

(b) must have regard to its obligations under section 17 of the Act.

(2) The Government acknowledges that targeting the long-term benchmark return implies accepting the risk of capital losses, in adverse markets, that may be 15-20 per cent of the portfolio over a three-year period.

7. Board must consider impacts from its investment strategy

(1) In undertaking its investment activities, the Board must act in a way that:

(a) minimises the potential to effect any abnormal change in the volatility or efficient operation of Australian financial markets; and

(b) is unlikely to cause any diminution of the Australian Government’s reputation in Australian and international financial markets.

8. Corporate governance

(1) The Board must have regard to international best practice for institutional investment in determining its approach to corporate governance principles, including in relation to its voting policy.

9. Reporting

The Board must publish quarterly portfolio updates on its website showing:

(a) actual returns against benchmark return; and

(b) asset allocations by category.

DisabilityCare Australia Fund Investment Mandate Directions 2014

Part 1 Preliminary

1. Name of Directions

These Directions are the DisabilityCare Australia Fund Investment Mandate Directions 2014.

2. Commencement

These Directions commence on the 15th day after they are given.

^{Note: Section 42 of the Legislative Instruments Act 2003 (which deals with the disallowance of legislative instruments) does not apply to this instrument: see section 44 of that Act. Part 6 of that Act (which deals with the sunsetting of legislative instruments) does not apply to this instrument: see section 54 of that Act.}

3. Definitions

In these Directions:

Act means the DisabilityCare Australia Fund Act 2013.

Board means the Future Fund Board of Guardians.

Fund means the DisabilityCare Australia Fund.

Responsible Ministers has the same meaning as in the Act.

4. Object of these Directions

(1) The DisabilityCare Australia Fund is a financing source to enhance the Commonwealth’s ability to reimburse the States and Territories and the Commonwealth for the expenditure incurred in relation to the National Disability Insurance Scheme Act 2013.

(2) The object of these Directions is to give guidance to the Board in relation to its investment strategy for the Fund. The Board is required by the Act to seek to maximise the return earned on the Fund, consistent with international best practice for institutional investment, subject to its obligations under the Act and any directions given by the responsible Ministers under the Act.

(3) These Directions are given under subsection 29(1) of the Act to articulate the Government’s expectations for how the Fund will be invested and managed by the Board.

(4) The responsible Ministers may review these Directions, in consultation with the Board, including after any request by the Board in the context of any material changes to either the prevailing investment conditions or the cashflow position of the Fund.

Part 2 Directions

5. Investment Objectives

(1) The Board should invest in such a way as to minimise the probability of capital losses over a 12 month horizon.

(2) Subject to the Board’s obligations under section 23 of the Act and to (1) above, the Board is to adopt a benchmark return on the Fund of the Australian three month bank bill swap rate + 0.3 per cent per annum, calculated on a rolling 12-month basis (net of fees).

6. The Board must consider impacts from its investment strategy

In undertaking its investment activities, the Board must act in a way that:

(1) minimises the potential to effect any abnormal change in the volatility or efficient operation of Australian financial markets; and

(2) is unlikely to cause any diminution of the Commonwealth Government’s reputation in Australian and international financial markets.

Building Australia Fund Investment Mandate Directions 2009

Part 1 Preliminary

1. Name of Directions

These Directions are the Building Australia Fund Investment Mandate Directions 2009.

2. Commencement

These Directions commence on the 15th day after they are given.

^{Note: Section 42 of the Legislative Instruments Act 2003 (which deals with the disallowance of legislative instruments) does not apply to this instrument: see section 44 of that Act. Part 6 of that Act (which deals with the sunsetting of legislative instruments) does not apply to this instrument: see section 54 of that Act.}

3. Definitions

In these Directions:

Act means the Nation-building Funds Act 2008.

Board means the Future Fund Board of Guardians.

Fund means the Building Australia Fund. responsible Ministers has the same meaning as in the Act.

responsible Ministers has the same meaning as in the Act.

4. Object of these Directions

(1) The Building Australia Fund is a financing source to enhance the Commonwealth’s ability to make payments in relation to the creation or development of transport, communications, energy and water infrastructure, and eligible national broadband network matters.

(2) The object of these Directions is to give guidance to the Board in relation to its investment strategy for the Fund. The Board is required by the Act to seek to maximise the return earned on the Fund, consistent with international best practice for institutional investment and subject to its obligations under the Act and any directions given by the responsible Ministers under the Act.

(3) These Directions are given under subsection 35 (1) of the Act to articulate the Australian Government’s expectations of how the Fund will be invested and managed by the Board.

(4) The responsible Ministers may review these Directions, including the benchmark return, in consultation with the Board. The first review is expected to occur before 1 July 2010.

Part 2 Directions

5. Benchmark return

(1) The Board is to adopt a benchmark return on the Fund of the Australian three month bank bill swap rate + 0.3 per cent per annum, calculated on a rolling 12 month basis (net of fees).

(2) In targeting this benchmark return, the Board should invest in such a way as to minimise the probability of capital losses over a 12 month horizon.

6. Board must consider impacts from its investment strategy

In undertaking its investment activities, the Board must act in a way that:

(a) minimises the potential to effect any abnormal change in the volatility or efficient operation of Australian financial markets; and

(b) is unlikely to cause any diminution of the Australian Government’s reputation in Australian and international financial markets.

Education Investment Fund Investment Mandate Directions 2009

Part 1 Preliminary

1. Name of Directions

These Directions are the Education Investment Fund Investment Mandate Directions 2009.

2. Commencement

These Directions commence on the 15th day after they are given.

^{Note: Section 42 of the Legislative Instruments Act 2003 (which deals with the disallowance of legislative instruments) does not apply to this instrument: see section 44 of that Act. Part 6 of that Act (which deals with the sunsetting of legislative instruments) does not apply to this instrument: see section 54 of that Act.}

3. Definitions

In these Directions:

Act means the Nation-building Funds Act 2008.

Board means the Future Fund Board of Guardians.

Fund means the Education Investment Fund.

responsible Ministers has the same meaning as in the Act.

4. Object of these Directions

(1) The Education Investment Fund is a financing source to enhance the Commonwealth’s ability to make payments in relation to the creation or development of higher education, research, vocational education and training and eligible education infrastructure, and to make transitional Higher Education Endowment Fund payments.

(2) The object of these Directions is to give guidance to the Board in relation to its investment strategy for the Fund. The Board is required by the Act to seek to maximise the return earned on the Fund, consistent with international best practice for institutional investment and subject to its obligations under the Act and any directions given by the responsible Ministers under the Act.

(3) These Directions are given under subsection 154 (1) of the Act to articulate the Australian Government’s expectations of how the Fund will be invested and managed by the Board.

(4) The responsible Ministers may review these Directions, including the benchmark return, in consultation with the Board. The first review is expected to occur before 1 July 2010.

Part 2 Directions

5. Benchmark return

(1) The Board is to adopt a benchmark return on the Fund of the Australian three month bank bill swap rate + 0.3 per cent per annum, calculated on a rolling 12 month basis (net of fees).

(2) In targeting this benchmark return, the Board should invest in such a way as to minimise the probability of capital losses over a 12 month horizon.

6. Board must consider impacts from its investment strategy

In undertaking its investment activities, the Board must act in a way that:

(a) minimises the potential to effect any abnormal change in the volatility or efficient operation of Australian financial markets; and

(b) is unlikely to cause any diminution of the Australian Government’s reputation in Australian and international financial markets.