The Future Fund stopped trusting bonds to cushion a crash
Australia's Future Fund reached A$289.7 billion in the year to June 2026 and returned 14.8% against an 8.0% target. The interesting part is what it stopped doing. In 2024 it published the view that government bonds had stopped diversifying equity risk, and its published allocation now carries no government bond line at all. Cash does that job instead, and it is run as a position: 11.2% in mid-2023, 4.5% in March 2026, 5.4% in June.
Key numbers, and what they mean
14.8%
The Future Fund's return for the year to June 2026 against a mandate target of 8.0%. Since 2006 it has returned 8.3% a year against a 7.0% target.
0
Government bond lines in its published allocation. Having argued that bonds no longer diversify equity risk, it built the defensive side out of alternatives, infrastructure and cash instead.
5.4%
Cash at June 2026, down from 11.2% in mid-2023. It raised cash when it judged returns less certain and spent it as it deployed, which makes cash a decision rather than a residual.
CPI +4 to 5%
The return target its government sets, left unchanged in November 2024 even as three national priorities were added to the mandate. The hurdle did not move to accommodate the request.
Asset mix, June 2026
Global equities33.7%
Alternatives14.9%
Private equity12.1%
Infrastructure and timberland11.5%
Australian equities10.5%
Credit and property11.9%
Cash5.4%
The Fund's own labels. Global equities combines its developed and emerging market lines.
The read-through
From the report
Takeaway: how to apply it to a portfolio
The Fund published the view that the era of using government bonds to diversify equity risk is over, and its allocation now carries no government bond line.
If you no longer believe an asset does the job you hold it for, cut it rather than trim it. Write the reason down first, so the decision can be checked later instead of quietly drifting back.
Cash went from 11.2% in mid-2023 to 4.5% in March 2026 and 5.4% in June, moving with the Fund's own view of how certain returns were.
Cash is a position. Decide in advance what would make you raise it and what would make you spend it, then act on that, rather than letting it pile up as whatever was left over.
The government added housing, the energy transition and infrastructure as priorities in November 2024 and left the CPI plus 4 to 5% target unchanged. About A$3.5 billion has been committed, roughly 1.2% of the Fund, at broadly the same risk-adjusted return.
When someone adds a non-financial objective to your portfolio, hold the return requirement fixed and let the size of the allocation absorb the request. Lowering the hurdle instead is how a portfolio stops funding what it exists to fund.
The Argus lensThe Future Fund replaced its defensive sleeve with alternatives, infrastructure and private assets, which means its protection now depends on managers rather than on a coupon. Whether a private fund actually delivers the thing you are holding it for is a document-level question. That is our work.
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About the source
The Future Fund's portfolio update to 30 June 2026, published 26 August 2026, covers the year to that date: the A$289.7 billion value, the 14.8% return and the asset allocation. The argument about bonds is from its own position papers of June 2024 and November 2025. The return target and the three national priorities are from the Future Fund Investment Mandate Direction 2024.