AUSTRALIA - The A$73.2bn ($78.2bn) Future Fund lost 2.9% in the third quarter, though moves to decrease equity exposures helped stave off more drastic losses.
Total fund assets decreased by approximately A$2bn from the previous quarter, results show.
The fund said the negative return was due to Australian and global equity markets falling 13% and 14% respectively on the back of declining European and US economic growth.
Fund chairman David Murray said the scheme decided to reduce exposures to listed equity markets and increase the cash position to help lower the impact of market falls on the portfolio.
At the end of September 2011, the fund allocated 10.6% in Australian equities; 20.9% in global equities; 5% in private equity; 6.3% in property; 5.6% in infrastructure and timberland; 19.2% in debt securities; 21.6% in alternative assets and 10.8% in cash.
The fund allocated 11.2% in domestic equities, 26.4% in global equities and 8.8% in cash at the end of June 2011.
Murray said: "In line with its long term mandate the board continues to focus on building a diverse portfolio comprising assets capable of generating strong returns. While this inevitably exposes the fund to periods of market volatility the board has carefully thought through its risk appetite and positioned the fund to avoid excessive risk.
"The Board is mindful that the uncertainty in financial markets can be expected to endure as the global economy continues to undergo significant structural adjustments over years to come."
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