Australia's wealth fund hunting for more property bargains
(Fixes typo in headline)
CANBERRA Oct 21 (Reuters) - Australia's A$63.4 billion ($44 billion) sovereign wealth fund will increasingly look for bargains in property and infrastructure to help cover future pension payouts, the fund's manager said on Tuesday.
The government-run fund, called the Future Fund, is Australia's largest single investment fund and was set up in 2006 to cover future public service pension liabilities. It still has about A$34.5 billion in cash assets.
Fund general manager Paul Costello said over the past year, as the global financial crisis worsened, the fund slowed investments in equities and has stayed under its target, preferring interest bearing securities.
"We still remain underweight for target allocation of around 35 percent of portfolio, so definitely we've been sensing some of the difficulty the equity market was facing, and perhaps will continue to face," Costello told a parliamentary hearing.
"So our program is slanted slightly away from equities, much more to what we call in our annual report tangible assets areas, like property and infrastructure, although we've been very slow in that area.
"We are just going to wait for pricing to improve a little for an investor like us."
He said the fund had no demands on liquidity, with the government saying there would be no withdrawals from the fund until 2020, giving the fund time to balance its portfolio.
But at present, the biggest share of the portfolio was in interest-bearing securities.
"We have large commitments to interest bearing securities across a whole range of areas, from the very very safe, through to areas where there is some distress globally," Costello said.
"And we've decided that that represents a terrific return for the risk deployed." ($1=A$1.44) (Reporting by James Grubel, editing by James Regan)
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