Future Fund’s CEO search could prompt asset reappraisal

A period of looming inertia as the sovereign wealth fund seeks a new leader could raise pressure on the government to draw down on some of its assets.
Future Fund’s CEO search could prompt asset reappraisal

Australia’s Future Fund should weather the surprise departure of chief executive David Neal due to the processes he installed, but the pending change in leadership may prompt a debate about when it is appropriate for Canberra to draw down on some of the fund’s assets.

On February 4 the Future Fund made the surprise announcement that Neal was leaving at the end of February to join Australian superannuation funds manager IFM Investors. He will replace its CEO Brett Himbury, who plans to retire. 

David Neal

Neal’s departure follows key exits from the fund in the last 18 months including real estate portfolio head Barry Brakey, private equity head Steve Byrom and chief investment strategist Stephen Gilmore, who joined the New Zealand Super Fund as CIO in February 2019. Most recently in December, the Future Fund’s head of equities Björn Kvarnskog left to join the Abu Dhabi Investment Authority. 

Gilmore, who had worked with Neal for eight years, told AsianInvestor the A$168 billion ($113.12 billion) fund had been successful in large part because of Neal's broad strategic investment approach. 

However, he was confident it would handle a change in leader. “It’s a well-structured portfolio and while it’s always hard to know what the future will be like, I think the fact that the Future Fund has a well-diversified portfolio, some high quality managers and a solid reputation – all those things will help maintain the positive returns over the long term,” said Gilmore.

One of the challenges the new CEO will face is the primary purpose of its funds, particularly given Australia’s current domestic economic and environmental crisis.

The sovereign wealth fund invests a lot of its assets overseas for the long term, but one investment industry expert, speaking anonymously, said some of the fund’s investment proceeds should be utilised locally.

“The Future Fund is effectively a rainy day fund, but the rainy day is here. In our case, it is not rain but bush fires. If I was the Australian treasurer, I would take $100 billion out of the Future Fund and allocate it to a massive transformational infrastructure investment programme that equips Australia for the next fifty years.”

The search for the next CEO is likely to take several months. In the interim, general counsel and chief risk officer Cameron Price will be its acting CEO. A spokesman for the Future Fund told AsianInvestor there are no plans to change the management structure.

“We are continuing to grow our overall team and David’s departure doesn’t change anything.” he said. Currently there are around 55 people in the investment team.

source: Future Fund


The Future Fund has grown in leaps and bounds since being established with seed capital of A$61 billion in 2006. Neal joined as chief investment officer the following year, and was appointed CEO in August 2014.

Ever since joining, Neal helped design and implement the fund’s core investment strategies, including its substantial allocations to illiquid assets, private equity and infrastructure. Gilmore said Neal spent a lot of time thinking about the Future Fund’s mandate – to maximise return without taking excessive risk.

“He was very focused on what stakeholders wanted and was keen to ensure sure the people within the organisation were fully aligned with those objectives,” said Gilmore. “He didn’t like the idea of having intermediate targets or benchmarks, but tended to focus more on actual portfolio outcomes.”

That approach helped ensure Future Fund could boast very strong returns: for the 10 years to December 2019 the fund achieved a return of 9.9% per annum, well ahead of its benchmark target of 6.4% per annum. Its assets now stand at A$168 billion. 

In addition, Neal was also keen to improve the data and analytics of the Future Fund, “so it wouldn’t surprise me if he looked at ways to enhance that at IFM”.

Gilmore predicted that whoever the Future Fund looks to hire as Neal's replacement will not be asked to do anything radical, at least initially.

“It’s quite difficult going into an organisation where there has been someone who has been so closely identified with the overall strategy. David has been the driving force, not just on the investment side.

"It’s probably a period of consolidation I imagine. They will want to continue with the whole of portfolio, joined-up approach."


Prior to joining the Future Fund, Neal spent 15 years with Willis Towers Watson starting his career in  the UK before establishing and leading the firm’s investment consulting business in Australia. 

Neal is joining another organisation with a lot of assets to manage. IFM has around A$160 billion of funds under management for 27 industry superannuation funds representing an estimate 30 million pension scheme members. It also manages funds for sovereign wealth funds, endowments, foundations and insurers. No precise date for when Neal takes over from the retiring Himbry has yet been announced. 

Meanwhile, Price should be a steady pair of hands for the Future Fund until a new CEO is found. He joined in March 2014 as general counsel and was also made chief risk officer in March 2018. Previously he was a partner at law firm Allens Linklaters.

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