AUSTRALIA - The government has appointed six members to the future fund board of guardians in a move described as a "substantial step" towards the fund's establishment.
The board is set to consultant with government in the coming weeks on the the fund's proposed investment mandate.
The government had earlier confirmed the guardians would be subject to minimal investing restrictions in the fund. It has already said the board would be required to seek a long-term benchmark for real returns of between 4.5% and 5.5%, although the government conceded market conditions could mean that return was not always achieved.
The fund would also not be able to take a controlling stake in companies where a controlling stake was defined by reference to the takeover provisions of the Corporations Act, and neither would the fund be permitted to borrow money except for short-term settlement of transactions.
The fund will be prohibited from using derivatives for leverage or speculation, and its board would be restricted to investing in financial assets, thus precluding direct investment in infrastructure projects or property.
The board will be comprised of Jeffrey Browne, Susan Doyle, Robert Elstone, John Mulcahy, Trevor Rowe and Brian Watson, with David Murray appointed chair last November.
The future fund will be created as part of the coalition government's policies to prepare for the ageing of the population.
By Damian Clarkson
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