Fund eyes 'battered assets'Clancy Yeates March 6, 2009 THE taxpayer-backed Future Fund is considering taking bigger stakes in battered asset classes that many investors have abandoned, including property, infrastructure and hedge funds.
At the end of December the fund had 1.3 per cent of assets in property and 1.9 per cent in infrastructure, stakes general manager Paul Costello described as "very modest".
Several companies in both sectors have been forced to offload assets because they have been unable to repay their loans or refinance debt.
"From our organisation's point of view, this is a very interesting time in those areas," Mr Costello said.
"We have been extremely cautious in terms of making commitments right now, and that area is under very active study from ourselves."
The Future Fund aims to return 4.5 per cent a year above inflation to meet about $150 billion in public service pension payments from 2020, but in 2008 it lost 8.49 per cent as markets plunged.
Mr Costello did not give details of any deals under consideration, and said buyers and sellers were yet to agree on the appropriate prices in these two asset classes.
There are a swag of infrastructure funds looking to sell stakes in their assets, including Babcock and Brown Infrastructure, B&B Power, and Macquarie Infrastructure Group.
Mr Costello also revealed that the fund was doing "a lot of thinking" about activity in the hedge fund market, which was a high-flyer in the boom years but is undergoing consolidation as the weaker players are weeded out.
The $60 billion Future Fund does not operate hedge funds, but 3.7 per cent, or $1.9 billion of its portfolio, is invested in "alternative assets", which Mr Costello said included a "hedge-fund-like" investment program.
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