In todays West Australian.... might support the market for a little whiles yet???
Fund ready to invest, despite market concerns
17th June 2007, 11:00 WST
The $51 billion Future Fund will begin investing by the end of this financial year - only weeks away - regardless of concerns it may be entering at the top of the market.
The investment fund was established by the federal government in 2006 to meet Commonwealth government superannuation liabilities, estimated to hit $148 billion by 2020.
The fund is estimated to be worth more than $51 billion, with $42 billion in contributions from the government, and a little under $10 billion in Telstra shares.
The fund’s general manager Paul Costello said today the fund, which appointed Watson Wyatt head David Neal as its chief investment officer last week, was "on track" to achieve its plan of investing before the end of this financial year.
"We’ve always said that we will begin investing in this financial year, and of course that’s now only a couple of weeks away," Mr Costello told ABC TV.
"So that remains on track ... and that plan will be executed."
But asked if he was concerned the fund might be investing at the top of the market, which in the past few years has witnessed unprecedented gains, Mr Costello said, "I think that’s a concern for all investors".
"We’re absolutely clear that this is not a good time to be investing a large portfolio as a few years ago might have been, so we spend quite a bit of time thinking around that," he said.
"We know that there are many investors who have been punished for standing on the sidelines for too long waiting for corrections to happen which do take some time.
"Equally there have been investors who have been punished for jumping in to markets without being sensitive, so we are trying to run a middle road there."
Mr Costello was again forced to defend the appointment of US-based Northern Trust as the fund’s global custodian.
The appointment of an overseas bank raised concerns among unions and the federal opposition, not least because of its links to the collapse of US energy giant Enron.
"I think there was a great deal of comment made before people perhaps really understood what the role the custodian was, and appreciated that by definition a global custodian must be a global organisation, it must be a global bank,” he said.
"We remain absolutely convinced that this is the right call for us."
But the fact the Future Fund had become such a politically sensitive body would have no impact on the body’s independence, Mr Costello said.
"We value our independence,” he said.
"Government has been very clear with us - they believe the fund will only be successful if it feels free to make decisions that it believes are appropriate for the portfolio.
"The board is of the same view... We will continue to make the decisions that we think are best for the portfolio irrespective of comment that sometimes might flow."
Mr Costello said how the money would be spent would be decided by the government of the day - and was not an issue of concern for the fund.
Labor has promised, if it wins the upcoming election, to use $2.4 billion from the fund to help pay for a national high speed fibre-optic broadband network.
The policy has been condemned by the government as undermining the fund’s intent of meeting superannuation liabilities.
"Our job is to manage the contributions that are given, and government has been clear about what they expect back from that, so really these other issues are not ones that we spend a great deal of energy (on),” Mr Costello said.
AAP