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Future Fund gains $9.3 billion in 2012

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AAP

February 05 2013, 6:04PM

By Kim Christian

PERTH, Feb 5 AAP - Australia's Future Fund gained more than $9 billion in 2012 as improving global markets drove returns of more than 12 per cent.

The sovereign wealth fund finished the year with a balance of $82.4 billion as directors forecast a "reasonable prospect" of long-term returns.

Although the Future Fund grew $9.3 billion in the year, managing director Mark Burgess said long-term investors needed to examine whether the strong returns being experienced by markets were sustainable in the face of long-term fiscal challenges in the US and other developed markets.

"On balance we believe that, in general, markets offer reasonable prospective long-term returns, albeit that considerable uncertainty remains," Mr Burgess said.

"In such an environment we believe it is important for us to maintain a disciplined, medium to long-term view and a focus on diversification."

He said 2012 had ended on a positive note and that sentiment had continued into 2013 after central bank policy around the world served to pump liquidity into the system to stimulate economic activity.

"This action, together with political efforts in the United States to navigate the fiscal cliff, and improving economic conditions in China, has seen markets move higher," he said.

"In this environment investors have been able to generate pleasing returns."

The Future Fund, which was created in 2006, returned seven per cent for the first six months of the financial year, well ahead of the five-year average of 5.3 per cent per annum, but behind its three-year average of 7.9 per cent.

Global equities, debt securities and Australian equities made up more than half the fund in 2012.

Meanwhile, the value of some of the sub groups within the fund such as the Education Investment Fund was $4.1 billion, the Building Australia Fund stood at $5.3 billion and the Health and Hospitals Fund tallied $3.2 billion.