$170m Olympics fund rides out pandemic
Australian sport's biggest investment fund, the Australian Olympic Foundation, managed to break even last year despite the ravages of the COVID-19 pandemic that resulted in a double-digit decline in the valuation of its assets in the March quarter.
Speaking with Future Generation Companies CEO Louise Walsh for the Conversations with Future Generation series, Australian Olympic Committee president John Coates revealed that the foundation was now valued at $170m, up from $101m when it was launched in 2001 following the Sydney Olympics.
While this represents annualised returns of just 2.7 per cent, Mr Coates said this did not take into account distributions to the AOC that are not reinvested.
The foundation moved to hold 20 per cent of its assets in cash last year as volatility took hold on global sharemarkets and after its cash positions increased in the second half of 2019.
"Gee we've done well with it, if I do say so myself,'' Mr Coates said.
"It is now $170m and that's after distributions to the AOC of $131m. So we've turned the 100 into 300 and it's a very important part of the AOC's income and it's why the AOC doesn't ask for or receive anything from federal government or any of the governments."
That current valuation is only slightly below 2019, when the money the foundation had invested rose by 13.6 per cent to $171.4m after making about $6.25m in distributions to the Australian Olympic Committee.
As the COVID-19 pandemic took hold a year ago, the AOF's assets fell 11.9 per cent to $150.85m at March 31 last year, after it had distributed $1.562m to the AOC in the quarter.
The foundation's annual report is due to be released next month. It engages Mercers for asset allocation and its funds are spread across more than a dozen managers, including Colonial First State, Lendlease, Arrowstreet, Alliance Bernstein, Northcape, Wilson Asset Management, Vanguard and Pendle Group.
"And you know we're active. If they don't perform then we move them on but they've been very good but generally we're long-term investors," Mr Coates said.
"There's no one else in the Olympic world that's got a foundation like this and as you say it's probably unique in Australian sport, too."
During 2019, the foundation also put $5m in a Kapstream cash-enhanced fund to look for higher cash returns than those being offered by term deposits, moving the money from a fund exposed to the commercial property sector.
Mr Coates said the key to the foundation's success was good advice.
"We've got an advisory committee, we've got Mercers and then you've got to have a strategy," he said.
"So our strategy is to achieve consumer price index (CPI) plus the 4 per cent, which is pretty ambitious these days.
"That 4 per cent is what we distribute so it's going to grow by the CPI, is the theory. You've just got to be disciplined. If the AOC's short on anything, tough. You go and borrow from the bank. We're very disciplined with this and it's paid off.''
The foundation's investment committee is headed by former federal opposition leader John Hewson and features former Macquarie director Helen Nugent, Gold Coast private client adviser Angus Douglas and former AMP CEO Paul Batchelor.
Last month Brisbane took a huge step towards staging the 2032 Olympic Games when it was chosen as the IOC's preferred partner to host the event.
Mr Coates, who is also IOC vice-president, said staging the Olympics would essentially cost Queensland nothing.
"The budget is about $4.5bn at the moment until we start and reduce things," he said. "But the IOC's putting in $2.5bn of that. Bang. Committed. The IOC's already sold the television rights for America alone for $US2.4bn. And we didn't lose any sponsors during coronavirus.
"I'm not sure that there'll be a surplus, but if there is, there's some money there. But we've just to make sure we spend it wisely and be totally transparent with Brisbane."
Originally published as $170m Olympics fund rides out pandemic