Report from
the CIO

I'm Ben Samild, the Chief Investment Officer of the Future Fund.

The investment and economic environment over the last year has been, as ever, challenging and interesting, and one in which active investors were able to add a significant amount of value.

Future Fund’s performed very well over the last 12 months. It was a backdrop that we have largely been anticipating a version of and been preparing the portfolio for, and preparing our internal processes for, and were able to respond to it quite confidently and generate some very reasonable returns.

More significant things we did this year was to take a little bit more risk, which was well rewarded. To move our currency exposure quite significantly away from the US dollar and into alternative currencies like gold, euro and yen. That was also quite well rewarded, and so as we look forward we are reassessing the sensibility of those and whether we should continue to lean into them or reconsider.

Challenges that the Investment Team were confronted with and worked on were really the same challenges that have been with us for the last five years. It's a really significantly changing geostrategic environment, and we have to really work hard to understand that, to comprehend it, but more importantly, to see and to try to understand how that's going to map through to capital markets, to opportunities in different spaces, and then to have the confidence to adjust our portfolio to audit.

The levers that we activated to enhance portfolio resilience were similar to the ones we've been working on over the last four years. This has been a significant journey for us and we've been very public about the journey we've been going on, in terms of trying to understand the investment environment and how that flows through to our portfolio construction. So this is everything from changes to our beta portfolio, to changes in the way we access alpha, to changes in the way we organise ourselves internally to understand the investment environment and then respond to it.

The one that increases resilience the most however is really understanding the investment environment that we're operating in and being able to generate reliable excess returns on alpha. Alpha is wonderfully uncorrelated to everything else we can do, and if we as an Agency can continue to generate excess returns independent of all the sort of broad risk premia and market betas, then that should hold our portfolio in really good stead.

Top priorities for the Investment Team and myself is really just embedding all the thinking and changes that we've been in a process of understanding over the last four years into our portfolio in an ongoing way and making sure we're constantly updating our priors and not getting complacent about our understanding of the world.