It is the fund’s weakest return over a calendar year since 2008,when it returned -8.5 per cent,though the fund’s returns were stronger than the -4.8 per cent return made by a typical superannuation fund last year.
Handing down the results,Future Fund chairman Peter Costello said the fund had faced an extremely difficult investment environment as global share markets tumbled in response to central banks raising interest rates sharply. The ASX 200 lost 5.5 per cent in 2022,and Wall Street’s S&P 500 dropped 13.6 per cent.
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Costello highlighted the risk of recession in developed world economies and said interest rates had further to rise,including in Australia,as central banks try to rein in inflation.
“The cycle of rising rates to control inflation is not yet complete and brings with it the possibility of recessions in much of the developed world,” he said.
The decline in the fund’s assets stands in stark contrast to the bumper year in 2021,when it returned 19.1 per cent,and it comes as investors are fretting over the risk that sharp rate rises could trigger a global recession.
The fund’s chief executive,Dr Raphael Arndt,said he did not think markets were pricing in a major recession,and the Future Fund remained cautious about its exposure to consumer-facing businesses. Markets have started the year more optimistically,with the ASX 200 up 8 per cent in 2023,but Arndt predicted more volatility as central banks try to bring high inflation under control.