The Future Fund says its investment strategy remains sound despite a negative 3.4 per cent return in the coronavirus-affected March quarter.
The fund, introduced in 2006 by former treasurer Peter Costello to help cover future superannuation liabilities of public servants, was set-up with an initial $60.5 billion contribution from the then Howard government.
The latest quarterly report showed the fund stands at $162 billion, despite the ASX 200 falling 23.1 per cent and the S&P 500 slipping 19.7 per cent in the period on the back of the COVID-19 pandemic.
“For some time we have warned about the risks to markets and the need to position the portfolio for a range of uncertainties,” said Mr Costello, who chairs the fund’s board.
“Over the past few years, the board has been selling down a number of illiquid exposures due to high pricing and to increase portfolio flexibility.
“Our dynamic approach has been extremely valuable in helping us prepare for and navigate a historic dislocation brought about by COVID-19.”
The fund’s chief investment officer Dr Raphael Arndt said it was taking a cautious and flexible approach.
“It is too early to know whether the unprecedented fiscal and monetary policy stimulus by governments around the world will be sufficient to offset the significant impact to global growth due to the COVID-19 pandemic,” Dr Arndt said.
“As a result, while we have participated in several opportunities created by the market disruption over recent weeks, we remain cautious in terms of overall portfolio positioning.”