Future Fund returns 15.4%, but warns momentum set to slow

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(Reuters) - Australia's sovereign wealth manager, the Future Fund, returned 15.4 percent for the year to June 30 but cautioned that returns are likely to slow as central banks globally begin tightening monetary policy.

The A$117.2 billion ($82.13 billion) fund has lowered its equities exposure while raising its cash holdings to balance its "risk and return objectives," it said in a statement.

Equities - both Australian and global - accounted for 33.8 percent of its assets, down from 43 percent a year ago. Allocation to debt securities stood at 9.8 percent at June-end while cash accounted for 19.5 percent of assets, up from 15 percent at the end of March.

"Stimulatory policy settings cannot be sustained indefinitely and it seems likely that generally returns in the future will be lower than in recent years," Fund Chairman Peter Costello said in a statement.

The fund, set up in 2006 with contributions of A$60.5 billion to cover pension liabilities for public servants, has consistently performed better than Australia's superannuation industry, according to regulatory filings.

Its return for FY15 is higher than its three- and five-year returns of 15 percent and 11.9 percent respectively.

In comparison, Australia's A$1.7 trillion pension funds have, on average, returned 7.1 percent over the past five years, according to government data.