Capital Allocators – Inside the Institutional Investment Industry CIO Greatest Hits: Sovereign Wealth Funds – Raphael Arndt (Australia Future Fund)
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Sep 1, 2025 Raphael Arndt, Chief Investment Officer of the Australia Future Fund, shares insights into modern portfolio management. He discusses the Total Portfolio Approach, contrasting his firm's focus on external partnerships with CPPIB's hybrid model. Arndt emphasizes the importance of strong manager relationships and innovative strategies in private equity. He delves into the adaptability of sovereign wealth funds during economic downturns, highlighting Australia's unique investment landscape and the impact of shifting organizational structures on decision-making. This engaging conversation is packed with wisdom for investment enthusiasts.
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One Team, One Portfolio
- Start a large fund with a 'one team, one portfolio' mindset to optimize at the whole‑fund level.
- Combining top‑down and bottom‑up thinking prevents individual teams from building conflicting exposures.
Size Hedges For Whole‑Fund Protection
- Size hedge positions to protect the whole fund, not just the hedge fund sleeve.
- Treat tail protection as portfolio insurance and accept short‑term cost for long‑term crash payoff.
Think In Factors Not Buckets
- Map assets by factor exposures (equity risk premium, duration, inflation) rather than by static asset classes.
- Use scenario analysis to forecast factor behavior and shifting correlations.