David Gonski is an interesting businessman. For example, the Wikipedia machine claims that he sits on 40 boards and is Non-Executive Chairman of Coca-Cola Amatil, Ingeus Limited; Swiss Re Life and Health Australia Limited, and ASX Limited. That’s remarkable.
And, as you may know, he was also recently named Chairman of the Australian Future Fund, which means he also oversees the operations and strategy of the $80 billion sovereign wealth fund. And it was in this capacity that he gave a speech to the Australian Resources Conference earlier this month. The speech is interesting, as it offers quite a bit of insight into the strategic vision for the Future Fund from its new Chairman. For example, here are a few of the interesting things he had to say:
“We are charged with achieving at least CPI+4.5 to 5.5% per annum over the long term with acceptable but not excessive risk. This simply stated objective implies a number of things:
- Our return target is challenging and so we are required to build a portfolio of somewhat risky assets if we are to achieve our mandated returns.
- Our target is based against Australian inflation, so investments that offer returns that are related to Australian inflation, such as Australian infrastructure, can be particularly attractive.
- At the same time, our risk tolerance is for acceptable, but not excessive risk. Which means that diversification – across industries, geographies and economic factors – is a central tenet of our investment approach.
- Our focus is long term. We have interpreted long term to be 10 year rolling periods – not monthly or quarterly returns. This long-term focus is reflected not only in the way in which we build the portfolio but also in the kids of relationships we form with our investment managers and the way we organize and remunerate our staff...
“The Fund believes firmly in the important of good governance and that good governance creates and protects value. We think about governance in terms of our own arrangements and how we shape and implement decisions. We think about governance in terms of quality of investment managers and other partners and advisers that we engage with. We think about governance in terms of how we exercise voting rights and how we communicate the expectations that we have to investee companies.”
All that is spot on. There isn’t any big ‘reveal’ here, but it’s just comforting to see the new Chairman carrying forward many of the same themes from the previous Chairman. It’s pretty clear from the speech that Gonski will continue to steer the Future Fund in the right directly. And that’s good.
Anyway, if you want to hear more, the entire interview is worth reading. I’d also recommend watching this interview with the Chairman, as it offers many of the same points in the written document... but without all the reading.
