Future Fund

The **Future Fund** is Australia’s sovereign wealth fund, established by the Commonwealth in 2006 to strengthen the government’s long-term financial position. It invests public assets for the benefit of future generations, including to help provision for unfunded Commonwealth superannuation liabilities. The fund is managed independently of day-to-day government investment decisions and is not an account or retirement product for individuals. ^[1][2]

Establishment and purpose

The Future Fund was established under the Future Fund Act 2006, which commenced on 3 April 2006. The government created it to build financial assets against obligations expected to place pressure on Commonwealth finances, particularly unfunded public-sector superannuation liabilities. The fund’s statutory purpose is therefore different from that of a retail or workplace retirement fund: it is a government investment fund, rather than a pool of members’ personal retirement savings. ^[1][2]

Its initial A$60.5 billion in contributions came from a combination of budget surpluses, proceeds from the sale of the government’s holding in Telstra, and the transfer of remaining Telstra shares. Those initial contributions were intended to establish a long-term asset base. The fund’s value has since grown through investment returns; the Future Fund reported that it had received no further government contributions by 30 June 2025. ^[3]

The fund’s assets belong to the Commonwealth, while the Board of Guardians holds investments in its own name and makes investment decisions independently of government. Government retains statutory oversight, including responsibility for appointments and setting the investment mandate. This arrangement separates the government’s role in defining the fund’s objectives from the Board’s role in implementing investment decisions. ^[4]

Governance and management

The Future Fund has two principal governance bodies: the Future Fund Board of Guardians and the Future Fund Management Agency. The Board is responsible for deciding how to invest the assets of the Future Fund and other public funds assigned to it. The Agency supports and advises the Board, develops investment recommendations and carries out operational work associated with managing the portfolios. ^[2][5]

The Board is a statutory body corporate. Its chair and other members are appointed by the responsible ministers under the legislation, on a part-time basis, for terms of up to five years. Members are selected for relevant expertise in areas such as investing in financial assets, investment management and corporate governance. The Commonwealth Department of Finance describes the Board’s investment decisions as independent of government, while noting that the Commonwealth remains the owner of the funds. ^[4]

The Treasurer and Minister for Finance have oversight responsibilities, but the Board’s investment decisions are designed to be made at arm’s length from government. The government sets the investment mandate and appoints Board members; the Board decides how to invest within the mandate and its other legal duties. The legislation also provides accountability arrangements, including annual reports and audited financial statements tabled in Parliament, as well as periodic investment reporting. ^[4][6]

The Future Fund Management Agency’s role has expanded since the original fund was created. It now supports the Board in managing several Australian Government investment funds, each with its own legislation, purpose and investment mandate. These include the Medical Research Future Fund, the DisabilityCare Australia Fund, the Aboriginal and Torres Strait Islander Land and Sea Future Fund, the Future Drought Fund, the Disaster Ready Fund and the Housing Australia Future Fund. The existence of these additional portfolios does not make them part of the Future Fund itself: each is a distinct public fund with separate objectives. ^[5]

Investment mandate and strategy

The Future Fund Investment Mandate sets the central risk-and-return framework for the portfolio. The current mandate, issued in November 2024, requires the Board to adopt a benchmark average return objective of at least the Australian Consumer Price Index (CPI) plus 4.0% to 5.0% per year over the long term. It also directs the Board to pursue that objective with an acceptable, but not excessive, level of risk. ^[2][7]

The mandate is a long-term benchmark, not a promise of a particular return in each year. Actual investment results fluctuate with markets, and the Board’s objective includes managing risk as well as seeking returns. The fund assesses performance against its mandate over the relevant long-term period, and its published reporting includes returns over different intervals. ^[2][8]

The 2024 mandate also requires the Board to have regard to specified Australian national priorities when carrying out its investment functions: supporting the energy transition, increasing the supply of residential housing and delivering improved infrastructure located in Australia. The government’s announcement stated that the fund’s primary focus remains maximising returns, and that consideration of these priorities is to be consistent with the mandate’s financial objectives and risk requirements. ^[2][7]

The fund describes its approach as a diversified, long-horizon investment strategy. It invests globally across public and private markets and uses a total-portfolio approach rather than relying on one asset class or a single benchmark index. Its investment categories include listed equities, private equity, credit, cash, alternative assets and tangible assets such as real estate, infrastructure and timber. Portfolios may also use currency, interest-rate and other overlay exposures. ^[9][10]

The Future Fund works with external investment managers to implement strategies across markets and asset classes. Its own materials describe the portfolio as tailored to the mandate and investment environment, with diversification and risk management intended to support the long-term return objective. The fund publishes periodic investment reports and portfolio updates describing exposures, activity and performance. ^[9][10]

Withdrawals and the 2024 changes

The Future Fund Act sets out when money may be debited from the fund. The Department of Finance states that withdrawals may be used to discharge unfunded Commonwealth superannuation liabilities once the fund reaches the statutory target asset level, or from 1 July 2020, whichever occurs earlier; withdrawals may also meet expenses associated with investment and administration. ^[1]

In November 2024, the government announced that drawdowns for the purpose of meeting liabilities would not begin until at least the 2032–33 financial year. The announcement described this as part of making the fund an enduring national asset and providing certainty for long-term investment. The delay did not remove the fund’s role in relation to unfunded superannuation liabilities; it changed the expected timing of withdrawals. ^[7]

The same announcement introduced the updated mandate and a Statement of Expectations. The mandate’s investment-priority provisions set a policy context for considering national priorities while retaining the long-term return objective. These directions do not make the Board the body responsible for selecting or funding particular government programs. The Future Fund says it has no role in deciding which projects or initiatives receive public funding; that role remains with government. ^[3][7]

Performance and public reporting

The Future Fund publishes performance information through annual reports, periodic investment reports and portfolio updates. For example, its update for the year to 30 June 2025 reported a one-year return of 12.2% and a 10-year annualised return of 8.0%. It reported a fund value of A$252.3 billion at that date, after investment returns increased the value by A$27.4 billion during the financial year. These are historical results for specified periods, not forecasts. ^[3][11]

Comparisons with the mandate depend on the measurement period and the benchmark applying during that period. The Future Fund’s reporting distinguishes between short-term outcomes and longer-term performance, reflecting the fact that the fund is designed to invest over an extended horizon. The organisation also reports financial statements and information about governance, costs, investment activity and portfolio exposures. ^[6][8][11]

Distinction from superannuation funds

Despite its connection to Commonwealth superannuation liabilities, the Future Fund is not a superannuation fund for individuals. It does not accept contributions from workers, maintain personal member accounts or provide individual retirement products. Instead, it invests Commonwealth-owned assets to support the government’s long-term financial position and statutory obligations. The distinction is relevant when comparing it with Australian superannuation funds, which hold retirement savings for their members. ^[1][3]

Significance

The Future Fund is a central part of Australia’s public-asset management framework: it combines a statutory investment objective, independent investment governance and public accountability. Its assets are intended to strengthen the Commonwealth’s financial position over time, while its investment mandate shapes the balance between return, risk and government-set priorities. Its structure also illustrates the difference between sovereign wealth funds and individual retirement-savings arrangements. ^[1][4][7]