Disclosure
Future Fund's $2B venture portfolio generated over 20% net across 10 years
“And we've done about 30 or so of them, as I said, and that portfolio has delivered You know, really strong over 20% net returns over 10 years now, which is very satisfying considering what's been happening in the world.”
Assertion Supported
Arndt: Future Fund Halted Equity Investing in 2007 on Negative Risk Premia
“And David Neal, when he was hired as CIO and the person who was in the head of strategy role at the time, Tony Day, came on board before I joined. And the very first thing they did was look at markets and say, we're not sure what's going on, but we think the e…”
Assertion Contradicted
Future Fund held 80% of its portfolio in cash when Lehman collapsed
“Fortuitously, and through some good decisions made by the people who were here before me, we were sitting with about 80% in cash when layman's went broke.”
Assertion Not publicly verifiable
Arndt: Future Fund GFC Credit Allocations Returned Above 20%
“It was probably about 15 to 20% of the portfolio into credit over about three months. So it was quite a big decision, and clearly that decision paid off very well. Those initial investments returned above 20%.”
Disclosure
Future Fund holds over 15% in cash to preserve flexibility
“And so that's why you see us sitting with sort of a bit over 15% in cash, and why we manage our illiquid asset pool carefully, because while you would hope you get an illiquidity premium from those assets, it also means your portfolio isn't as flexible as it m…”
Disclosure
Future Fund trials pre-canvassing IC votes to reduce dominant-voice bias
“So we've transitioned to a model now for some of our committees, and it's in trial where we canvas views the day before the meeting. Whether people are inclined to vote for or against something, and why, and then the chair of the meeting gets that information.”
Disclosure
Arndt: Future Fund Quantitative Bonuses Are Solely Based on Total-Fund Three-Year Returns
“But the quantitative performance measure, and the more senior you are, the more important that is, is solely based on the rolling three year whole of fund performance in an absolute sense.”
Disclosure
Future Fund holds significant onshore Chinese exposure in private equity
“So we've been playing them A little bit in the equity market we're working on some further strategies there, but significantly in our private equity program, where we have quite a bit of onshore Chinese exposure, really playing those themes.”
Insight
Arndt: 50-year macro drivers like debt cycles and demographics won't continue
“There's a whole lot of things over the last 50 to 80 years, a huge leveraging cycle, a huge demographic boom post-war, that have meant that certain things behaved the way they did, that I just don't think are likely to continue. So I think we have to go back t…”
Disclosure
Arndt: Post-COVID Stimulus Forced Future Fund to Overhaul Portfolio
“So when COVID happened and government started to stimulate, we sort of got really interested in whether the world was changing, and I felt like we had to reposition not just the portfolio, but the mindset of the organisation around the world being different no…”
Insight
Arndt: Millennials and Gen Z Expect Different Policy Due to Scarring
“People who are, say, under 45 today, millennial and Gen Z, really have a very different lived experience, partly because of how old they were when the financial crisis happened, and what sort of jobs they got, what that felt like for them, whether they could a…”
Assertion Not checkable as stated
Arndt: Modern Financial Models Over-Rely on Post-WWII Data
“Most of the data we have comes from the era post-World War II, and in many cases, really only the last 30 or 40 years. And so we've been in a particular part of the cycle during that period.”
Opinion
Arndt: Credit Looks Attractive Following Broad Market Repricing
“Credit actually looks pretty attractive because it has repriced.”
Disclosure
Future Fund Added Rare Earths and Metals to Hedge Stagflation
“We think commodities are one of the few things that have worked through stagflationary periods and inflationary periods, and we see no reason to think the future will be different, but you've got an added tailwind now that in the decarbonized economy, a lot of…”
Opinion
Arndt: Real Estate Credit Is Attractive Due to Capital Shortages
“Right now, real estate credit, for example, looks pretty interesting. There's a shortage of capital, and so our real estate teams and our credit teams are working together on that.”
Disclosure
Future Fund Quintupled Tech Team to Build Custom Data Capabilities
“And we just couldn't buy it off the shelf, what we wanted. So our technology team, I think, quintupled over the period of four or five years.”
Insight
Arndt: Asset Owners Learn Best From Peers, Not Flattering Fund Managers
“Fortunately or otherwise, when you're an asset owner, most people you speak to either work for you, and so it's always hard to know if they're really telling you what they think, or want a mandate off you. And so usually they agree with you wholeheartedly. I'm…”
Disclosure
Arndt: Future Fund's Expert Board Avoids Quantitative Reference Benchmarks
“We have a board appointed by government, but the board are all industry experts. They're not a lay board. They can engage in quite a sophisticated way, and they've always been aligned and supportive, but they've always been close, and by that I mean we have mo…”
Insight
Arndt: Build Back Office and Custody Before Hiring Investors
“Very wisely made the decision that it was better to build the back office and the custody system and the legal approach first before you start hiring investment people, because, believe it or not, investment people want to start investing straight away.”
Insight
Future Fund Measures Risk Through Three-Year Rolling Cumulative Drawdowns
“And then secondly, we think about risk in terms of the cumulative drawdown over a three year rolling period, because we think as a public fund, we've got a responsibility to the public and to the taxpayer and the tolerance for bigger drawdowns over longer time…”
Insight
Arndt: Implied equity risk premium reliably predicts 10-year returns
“We can take the long bond rate or some forecast beyond that and say, disaggregate that and say, what is the implied equity risk premia? And that's actually a pretty good predictor of future returns over 10 years so.”
Disclosure
Future Fund's 20 Active Equity Mandates Canceled Out to Beta
“When we aggregated up All of the maybe 20 or so mandates we had across that portfolio, by and large, they canceled each other out at the whole portfolio level, and I would have expected we would end up with something like beta less fees. Now, actually, as I sa…”
Insight
Arndt: Top-performing venture capital managers demonstrate rare performance persistence
“Firstly, our research showed that unlike almost any other asset class, the strongly performing managers tend to be persistent.”
Assertion Not checkable as stated
Arndt: 80% of Venture Capital Managers Fail to Return Capital
“I think the data we saw at the time was something like 80% of venture Managers don't return capital and only six or seven percent return enough capital to justify their existence.”
