Writing for Investor Daily, GSFM’s Stephen Miller comments:

When Future Fund chief executive, Raphael Arndt, talks of a “new economic paradigm”, and says the Future Fund government bond exposure is “close to zero”, it is clear that investment markets are approaching uncharted territory.

Stephen Miller
Speaking at the Financial Services Council’s inaugural Investment Summit recently, Dr Arndt, said the Future Fund has adjusted its approach to portfolio construction by throwing out conventional wisdom relating to constructing a portfolio.

One significant change that made many sit up and take note, is that the fund has erased nearly all of its exposure to government bonds. As Dr Arndt said, “there’s not much defensiveness left in those securities”.

His view is that while it’s important to have a defensive asset mix in a portfolio, with interest rates at record lows, there’s very little defensiveness to be had in this asset class and investors need to look elsewhere.

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