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Australian sovereign wealth fund back to black as stock market rebounds
Photo Credit: VCCircle

Australia's A$154 billion ($108 billion) sovereign wealth fund on Monday said it had paired back losses of the previous quarter to beat its target return for the year, helped by a rebound in global share markets.

In a quarterly statement, the fund showed returns of 5 percent for the quarter ending March 31, reversing investment losses of 1.2 percent the previous period and helping it beat its yearly target by 4.4 percentage points to 9.7 percent.

While the fund benefited from a strong rebound in local and international share markets, Future Fund Chairman Peter Costello warned record low government bond yields around the globe indicated lower returns in the long term.

"The last quarter showed strong returns in public equity markets, no doubt influenced by the U.S. Federal Reserve's decision to hold interest rates and easing US-China trade tensions," Costello said.

"In the longer term the global economy will face structural challenges including demographic shifts and high levels of debt."

The fund, established in 2006 to cover escalating pension liabilities for public servants, grew its allocation to equities by 3.5 percentage points to 32.9 percent during the quarter.

It trimmed exposures to private equity to 15.4 percent from a record high of 15.8 percent at the end of December.

The Future Fund was set up with contributions of A$60.5 billion from government surpluses and proceeds of the privatisation of telecommunications operator Telstra Corp Ltd .

It seeks returns of 4 percent to 5 percent above inflation.

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