April 27 (Reuters) - Australia’s sovereign wealth manager, the Future Fund, on Thursday, posted a return of 1.6 percent for the March quarter, in line with its target, after shifting money to alternative assets and cash.
With a return of 7.7 percent per year since the fund started in 2006, it is above its target of 6.9 percent. Yet, the fund’s Chairman Peter Costello warns of possible lower returns ahead.
“The Board remains conscious of uncertainty around global growth, global monetary policy, international political tensions and the potential for shocks to investment markets,” Costello said.
The fund posted last year its first quarterly decline in assets since 2012 amid market volatility and low interest rates.
Exposure to cash increased to 20.4 percent of the assets, from 19.7 percent in December, as the fund’s risk tolerance moved to the lower end of its spectrum.
“This reflects our view that we should only take on additional risk where the expected returns are appropriate,” said David Neal, managing director of the Future Fund.
Alternative assets rose to around 15 percent, from 14.2 percent in the last period, while equities - both Australian and global - were stable, accounting for 29 percent.
The Future Fund was set up with contributions of A$60.5 billion to cover pension liabilities for public servants and now stands at A$130 billion ($97.31 billion).
Last year, the fund was part of a consortium which won a A$9.7 billion bid to purchase Australia’s busiest port. China Investment Corp and Canada’s Ontario Municipal Employees Retirement System were also part of the winning group. ($1 = 1.3360 Australian dollars) (Reporting by Cecile Lefort; Editing by Simon Cameron-Moore)