The future fund had their quarterly numbers out, not long ago.
We’ve written a few times about some of the products we use, as DAA complements (JPM GMO, Perpetual Real Return) and that they are very defensively positioned, at the moment, in terms of raw asset allocation, and by slightly more complicated risk budgets and expected volatility.
Being defensively positioned, in a world of no free lunches, usually means lower returns, if markets have been strong. Equities, in particular US equities, have been very strong over the past year, recovering from the late 2021 to late 2022 sell-off, and if you haven’t owned a large lick of those, you’ve probably seen returns below average. The FF did ~6% flat over the past year.
You can see their asset allocation below, a little under 9% for Aussie shares, and ~20% for international. We have been closer to 50% higher/larger/greater, on those exposures, over the past year. Their positioning in emerging market equities is higher than ours (we’ve been nervous on how tight policy will impact those regions), but, that’s where the value is, in international equities. They are cheap.
Do note, we aren’t trying to make any negative connotations about performance or positioning. In fact, we share the intent behind their comments (shown below) about the outlook.
And we also agree about the return to (relatively) lower-risk assets across fixed income. Some yields are the highest they’ve been in 2022 years, which is a fantastic return, we think, and deserves higher allocations at the margin.
Just food for thought, about the various styles and strategies out there.
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