Arndt: Not enough alpha exists globally to actively deploy a $45B equity book
Raphael Arndt · CIO Greatest Hits: Sovereign Wealth Funds – Raphael Arndt (Australia Future Fund) · Sep 1, 2025 · at 39:51
Raphael Arndt explains portfolio scale constraints and the necessity of separating core beta exposure from alpha in sovereign-scale investing.
0:00 / 0:09exact quote · 9.8s
720p mp4 · rendered on demand · StarZero watermark
“Today the equity book is maybe forty-five billion dollars, and we're just not going to find enough skill out there in the world to invest forty-five billion dollars”
quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →
More from Raphael Arndt
Arndt: Future Fund avoids large buyouts, viewing them as fee-eroded levered equities
“Our portfolio has no large buyout at all, because we think that large buyout is really just levered equities, typically. And if there's skill added on top, and there might be, then most of that goes away in fees. So we don't think it adds a lot for the portfol…”
Future Fund avoids brand-name PE managers that rely on leverage over operations
“Well, there's a lot of brand names we don't have, and it varies why, but one of the most significant reasons is because they just use leverage we found to juice up their returns, and we don't think that's attractive.”
Future Fund Avoids Large-Cap Buyouts Entirely in Private Equity Portfolio
“Our portfolio has no large buyout at all, because we think that, well, that makes the capacity so much harder, by the way, but we think that large buyout is really just levered equities, typically. And if there's skill added on top, and there might be, then mo…”
Future Fund: Tail-risk hedges make up roughly 20% of hedge fund book
“So we have a couple of hedge fund strategies that really are sort of volatility traders or tail protection type mandates. And if we had diversified hedge fund portfolio, and if the person running that or the team running that were incentivized just based on th…”
Arndt: Future Fund holds almost no physical bonds due to low yields
“We hold almost no physical bonds. We don't have any concept of liability matching. We've only got a return target, and bonds aren't paying all that well at the moment, so there doesn't seem to be a strong reason to hold them, but we do have some rates exposure…”
Future Fund manages zero assets internally, deploying capital via 120 external managers
“We actually don't manage any assets internally, so we use managers for all of our implementation, and we've probably got about a 120 or so managers on the books at the moment, and would like it not to grow too much more than that, just so that we have the band…”