Murray says no to Snowy in his fund - Business - Business - smh.com.au

FUTURE Fund chairman David Murray has dismissed suggestions the fund could be used to buy a permanent strategic stake in Snowy Hydro.
Liberal Senator Bill Heffernan floated the idea last week, saying the fund could buy the Commonwealth's 13 per cent stake and then double its holding as a way of blocking foreign ownership.
He was backed up by independent MPs Peter Andren, Tony Windsor and Bob Katter, who are this week expected to introduce a motion into Parliament noting growing public concern about the $3-billion plus Snowy sale and forcing another debate on the issue.
But Mr Murray said in a television interview yesterday that the fund was set up to pay for the Government's superannuation liabilities. To do that and meet a long-term return target of 4.5-5.5 per cent a year after inflation, it needed to invest in a balanced portfolio.
"The Future Fund will not work and achieve its objective on the basis of assets being held there for other than balanced portfolio reasons," he said.
"[That] means our investment managers will be able to buy and sell shares freely in the market to achieve a properly structured portfolio that's likely to get the long-term target."
Mr Murray later told the Herald that the prospect of owning shares in Snowy Hydro was different from owning a significant stake in Telstra, because the fund would be expected to hold the shares indefinitely.
Telstra shares, on the other hand, would be sold down over time to a more normal level.
"Any asset where you don't have the freedom to trade so that your portfolio is balanced would not be good for the fund," he said.
His comments came as more than 500 people gathered in Jindabyne to protest against the sale of Snowy Hydro. More protests are planned over the next week as research analysts start briefing institutions on the sale.
Despite the growing antipathy towards the sale, more than 100,000 retail investors have already signed up to receive a prospectus, which is expected to be mailed out in mid-June.
Senator Heffernan plans to personally lobby the Prime Minister, John Howard, this week about ensuring there is a permanent 10 per cent shareholder cap on individual Snowy Hydro holdings.
The Future Fund has already received an initial injection of $18 billion, which is in an account at the Reserve Bank. Mr Murray said that would not be invested until the fund had hired a chief investment officer and set up systems and headquarters.
Mr Murray said that if it ended up with a big stake in Telstra, the performance of its shares - which have fallen 4.5 per cent this year, compared to a 5.8 per cent rise in the ASX 200 index - would have to be measured separately from the rest of the fund.