Australia Wealth Fund Increases Global Stock Holdings, Cuts Cash

(Bloomberg) -- Australia’s sovereign wealth fund increased its holdings of local and global equities last quarter, helping boost returns as stocks rallied.

The A$139 billion ($112 billion) Future Fund increased its allocation to developed market equities to 18.6 percent of assets in the three months ended Dec. 31, from 16.8 percent the previous quarter, it said in a statement Thursday. The fund cut its cash holdings by about A$2.6 billion in the quarter, to 16.4 percent of assets.

The increased allocation to stocks comes after the fund had boosted its cash holdings in 2016 to almost 23 percent on fears central banks had less firepower to respond to weakness in the global economy. Equity markets reached record highs last year amid increasing optimism on global growth and a continued expansion in company profits.

The fund gained 8.8 percent last year, it’s best return since 2014. It has returned an average 8.1 percent a year over the past decade, beating its target of 6.8 percent.

To contact the reporters on this story: Matthew Burgess in Sydney at mburgess46@bloomberg.net, Tim Smith in Sydney at tsmith58@bloomberg.net.

To contact the editors responsible for this story: Divya Balji at dbalji1@bloomberg.net, Peter Vercoe, Edward Johnson

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