Following the decision to defer drawing down from the Future Fund until at least 2026-27 the Government last night registered a revised investment mandate for the Future Fund, which will come into effect on 1 July 2017.
The revised mandate which will now be tabled in Parliament, reflects changed global investment market conditions and outlook.
Since its inception the Future Fund’s returns have grown to exceed the previous long term target rate. But actuarial analysis indicates global investment market conditions may make it increasingly difficult for the Future Fund Board of Guardians to achieve current returns without taking on excessive risk.
We have therefore issued the Future Fund with a new investment mandate, which sets a target return of at least the Consumer Price Index (CPI) +4 to +5 per cent over the long term.
This is a reduction in the target return of 0.5 per cent.
The Future Fund has performed strongly since being established in 2006, achieving returns of 7.7 per cent per annum, exceeding the benchmark return.
The Government supports the view that maximising returns must be balanced against the need to minimise the probability of losses to protect the taxpayer’s investment in the Fund.
The Government commends the Future Fund Board of Guardians on the sustained strong performance of the Future Fund, and the other Government investment Funds managed by the Board.