Santiago Principles Self-Assessment

Future Fund

Fund Details Fund Website Search Assessments PDF version
  • Pillar 1: Legal
  • Pillar 2: Institutional
  • Pillar 3: Investment
Principle 1

1. The legal framework for the SWF should be sound and support its effective operation and the achievement of its stated objective(s).

1.1. The legal framework for the SWF should ensure legal soundness of the SWF and its transactions.

1.2. The key features of the SWF’s legal basis and structure, as well as the legal relationship between the SWF and other state bodies, should be publicly disclosed.

The legal framework for the Board of Guardians and its supporting management team in the Future Fund Management Agency (Agency), together with arrangements for the governance and operation of the public asset funds for which the Board of Guardians is responsible, are detailed in the Future Fund Act 2006, the Nation-building Funds Act 2008, the DisabilityCare Australia Fund Act 2013 and the Medical Research Future Fund Act 2015. The framework is designed specifically to establish the sound and effective operation of the Fund and achievement of its objectives.

The legal basis and structure and the legal relationships between the Board of Guardians, Agency and the Australian Government are detailed in the legislation which is publicly available.

Additional detail and discussion of the basis and operation of the Board, Agency and the various public asset funds themselves is available from the Board’s annual report and website.

www.futurefund.gov.au/About-us/Legislation-and-governance

www.futurefund.gov.au/investment/how-we-invest/investment-mandates

Principle 6

6. The governance framework for the SWF should be sound and establish a clear and effective division of roles and responsibilities in order to facilitate accountability and operational independence in the management of the SWF to pursue its objectives.

The roles and responsibilities of the Government, as asset owner, and the Board of Guardians and Agency, as asset manager are detailed in the legislation.

Further detail is provided by the Investment Mandate Directions for each Fund and the Statement of Expectations and Statement of Intent exchanged between the Government and the Board of Guardians and the Agency.

Internal policies, procedures and protocols have been established to further delineate roles and responsibilities at the operational level.

www.futurefund.gov.au/About-us/Legislation-and-governance

Principle 18

18. The SWF’s investment policy should be clear and consistent with its defined objectives, risk tolerance, and investment strategy, as set by the owner or the governing body(ies), and be based on sound portfolio management principles.

18.1. The investment policy should guide the SWF’s financial risk exposures and the possible use of leverage.

18.2. The investment policy should address the extent to which internal and/or external investment managers are used, the range of their activities and authority, and the process by which they are selected and their performance monitored.

18.3. A description of the investment policy of the SWF should be publicly disclosed.

A Statement of Investment Policies, published on the internet as required by legislation, details the investment strategy and risk tolerance of the Board of Guardians and its application of portfolio investment principles. Annual reports, as well as regular public speeches and briefings, provide additional insight and discussion of the investment strategy. The Board is prohibited from borrowing under Section 23 of the Future Fund Act.

These documents and communication activities address matters relating to financial risk, leverage, the use of and extent of the activities and authority of internal/external managers as well as the process for their appointment and monitoring of their performance.

The policies and practices detailed by these documents and communications are consistent with the obligations contained in the legislation.

www.futurefund.gov.au/About-us/Legislation-and-governance

www.futurefund.gov.au/investment/how-we-invest/investment-policy-and-position-papers

www.futurefund.gov.au/annual_reports