Future Fund plans to add 50 people to investment team

The Australian sovereign wealth fund aims to build an internal investment team of 130 members in the next few years to adapt to a new world order — one where it expects several equally competing powers and a more challenging alpha-generating environment.
Future Fund plans to add 50 people to investment team

Australia’s Future Fund plans to add 50 people to its existing 80-strong investment team in the next few years, as the sovereign wealth fund tries to optimise its internal decision-making process and extract more alpha.

“We don't think that we can deliver the best possible returns if we're not also challenging ourselves to evolve our decision-making process,” said Wendy Norris, deputy chief investment officer, change and innovation, at Future Fund.

The hiring will focus on the internal development of the team instead of fishing externally in response to the talent crisis globally. The fund thinks it is also the best way to maintain consistency in the investment process, which it calls “one team, one portfolio”.


When the pandemic started back in early 2020, the sovereign wealth fund started a year-long project to review its portfolio and decision-making process.

Wendy Norris,
Future Fund

“The result of that was a conclusion that we expect contrary to the last 40 years or more, where we've had a pretty benign paradigm with one global hegemon, that we are more likely to be going into a divided world where there's a lot more equally competing powers,” Norris said during a keynote interview at AsianInvestor’s 12th Southeast Asia Institutional Investment Forum recently.

It’s a “fundamental change” to the world order and that will have impacts on the global economy, which will draw a response from policymakers, and then impact markets, she said.

“Our conclusion out of all of that was it's going to be a lot harder for us to meet our investment return targets going forward than perhaps it has been in the past,” she added. 

“The fundamental thing we realised is that we need to extract more alpha from everything that we do."

As of the end of September, Future Fund managed A$193 billion ($132 billion) of assets. Including the management of five other smaller government funds, total assets under management (AUM) stood at A$241 billion.

The fund invests primarily through external managers. As the investment environment became more challenging in recent years, it has started to think about how its internal investment team could add value and find alpha.

“And we think that is about constantly challenging ourselves to renew our investment process,” Norris said. “We can't use the same investment process that we could use a decade ago, when all of the key decision makers could fit around the one table. We have to work out how we're going to continue to challenge ourselves to bring diversity of opinions.”

In the meantime, Norris stressed that it is also important to keep the decision-making group small enough to make incisive decisions.

In May 2021, Future Fund’s chief executive officer Raphael Arndt said in testimony to parliament that the fund would add 70 people to the 80-member investment team, 20 more than the 50 new headcounts Norris said recently. 


Five years ago, Future Fund had seen both recession and stagflation scenarios as events with higher probability. Hence, it has been gradually building resilience in its portfolio by adding more assets in the private market.

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Future Fund’s latest performance report as of the end of September saw a small loss of 0.6% in the third quarter, notwithstanding large falls in global markets.

Its 10-year return stood at 9.2%, against a target of 6.6%.

“Fundamentally, we're just an absolute-return investor and our objective is to maximise returns without taking undue risk,” said Norris. “We're not like a pension fund that has immediate draws on liquidity regularly. We've been able to lean a little bit more into illiquid parts of the portfolio. We do that because we want to take every opportunity we can to earn a bit more return than you can get in public markets.”

As of the end of September, over half of Future Fund’s assets were invested in the private markest, with private equity being the largest part, accounting for 18.2% of the portfolio.

Source: Future Fund (as of September 30, 2022)

Overall, about half of its private equity investment went into buyouts, and the other half was in venture and growth capital, according to Norris.

“Buyouts and early-stage ventures have been quite resilient in the last little while, despite the fact that you've seen very strong market drawdowns in listed equities. Private equity in the large stable companies has performed quite well, and the earlier venture company space has performed well in both of those parts of the market,” she said.

“Both of those parts of the portfolio are still delivering positive performance. When you compare that to public market equities, that's a very strong relative return,” she added.

Future Fund thinks early-stage ventures represent the future of the economy, where disruptive ideas will change the global investing markets.  

“It's the only place in the portfolio where we feel that we can get exposure to something that's really differentiating,” she said.

The growth part of the portfolio, by contrast, would be less resilient, affected by the drawdowns in public markets, Norris noted.

“In addition to that, our infrastructure portfolio has been incredibly resilient throughout this period. It's continued to deliver long-term low double-digit returns, which has been quite surprising,” she said. 

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