In his first public address since taking the helm in August, Ben Samild, chief investment officer of Australia’s Future Fund, laid out his vision for the A$205 billion ($131 billion) sovereign wealth fund that underscores a radical shift towards collaboration and inclusion.
"We do this fantastically interesting thing and get paid for it. It’s a joyous privilege and it means something to so many people — to colleagues and their families, to Australian taxpayers and their families, and to future generations who will inherit this country," said Samild at the Conexus Fiduciary Investors Symposium on November 13.
"The Future Fund strengthens the Commonwealth’s credit rating. It bolsters the government’s balance sheet. And it offsets national debt and reduces future financial liabilities — that's less tax for every Australian to have to pay, well into the future," said Samild.
Samild highlighted the importance of fostering curiosity, collaboration, and purpose across the agency for the pursuit of superior long-term investment returns.
His key focus is to ensure strong risk-adjusted returns through a sense of connection and inclusion amongst the team.
"Connection and inclusion are vital to the success of our model. It is how we most effectively leverage diverse perspectives and the firehose of data, information, and insight that comes into the Future Fund every single day," he said.
His remarks signal a departure from the more traditional, competitive norms that have dominated the industry, pointing to a new era of cooperation and shared purpose in Australia's financial landscape.
SLOWLY BUT SURELY
The Future Fund was established in 2006 with an initial A$60.5 billion and has grown to A$205 billion today, with an additional A$60 billion managed for the Commonwealth Government across six other public interest funds.
Samild describes his appointment as being about an evolution rather than a revolution, with the Future Fund maintaining around 30% in listed equity exposure and 60% in equivalent equity exposure. The focus is on adding incremental value through asset allocation changes and asset selection success, he said.
"My organisational priorities are about facilitating a virtuous circle of learning and improving our probabilities of producing strong long-term results," said Samild.
He highlighted the recent changes to the investment team, including having two deputy chief investment officers, and a structural change where all sector heads and above sit on the Investment Committee. These changes were made to foster active ownership, participation, and contribution and to leverage diverse perspectives.
“This is definitely not the textbook ideal size for efficient decision making. But at its core, our style of investing makes a deliberate trade-off between efficiency and effectiveness. Effective in our context as a long-term asset owner is not necessarily always efficient,” he said.
A CHANGING WORLD
As the world emerged from the pandemic, and major themes including inflation, geopolitical challenges, and climate change came to prominence, the Future Fund released two profound position papers: “The New Investment Order”, which was followed by “The Death of Traditional Portfolio Construction?”
These views inform Samild’s structures and approaches for his team.
“The world is changing. We have been talking about the changing investment environment for a long time,” he said. “Inflation moving higher, rates following that trend; changes in the geopolitical order; more conflict; the challenge of climate change and re-designing the global energy system, and fiscal expansion are among the big themes we see as the most important influences on our daily investment decisions.”
Most, if not all of these structural forces have come to pass or are at least developing, he said.
“In the face of this, we have tried to build as much resilience into the portfolio as we can while we try to work through big questions like: What level of real rates can the international economy and global government finances sustain?” said Samild.
The answer to these questions, he believes, holds the key to the next evolution of their $A$255 billion portfolio and the seven public interest funds in their care.
Despite the challenges ahead, Samild remains confident. "The Future Fund investment culture is a created comparative advantage that complements our endowed advantages. It must be nurtured, evolved, and developed every day and it will always be a bit confusing; a bit ambiguous; a bit frustrating; but if done well, [then very] joyous and ultimately successful."