Sovereign wealth funds: The new rulers of finance
Financial institutions weigh up the opportunities
Temasek: A fund apart? The fund has A$60 billion ($52.4 billion) under management but has yet to do much with it: at June 30, when last disclosed, 75% of the portfolio was in cash. That figure becomes 91% if a slab of 2.1 billion Telstra shares, inherited from the state during the T3 privatization sale in February and to be held in escrow until 2008/09, is excluded.
Much of the fund’s activity since its official formation under the Future Funds Act in April 2006 has been in getting the logistics right. It hired David Murray, the former head of the Commonwealth Bank of Australia, as chair; added Paul Costello, who previously ran the New Zealand Superannuation Fund, a comparable sovereign wealth institution, as general manager; and then brought in David Neal from investment consultant Watson Wyatt – which had in turn been hired to advise on allocation and strategy earlier – as chief investment officer. In terms of investing, the fund has until June 30 2008 to lay the foundations of a long-term programme, and it won’t be until the following year that it starts being judged on performance.
