Frequently asked questions

The Auckland Future Fund’s purpose is to enhance Auckland’s physical and financial resilience, and help fund regional services and infrastructure, thereby reducing reliance on rates.

By diversifying Auckland Council’s major investments, the Auckland Future Fund is part of a financial strategy to better protect and strengthen Auckland in times of need.

The fund is designed to create long-term benefits for the Auckland region and protect the value of intergenerational financial investments, so it benefits future generations and provides a positive return to council. There are strict management protections in place to maintain the real value of the fund over time.

The Auckland Future Fund was introduced as part of Auckland Council’s Long-term Plan 2024-2034. It launched in September 2024 as a council-controlled organisation.

The Auckland Future Fund will diversify the council’s investments across different sectors and geographic locations, and will provide additional funding to council of around an additional $40 million of cash returns per year from 2025/26.

The Auckland Future Fund is a council-controlled organisation. The fund operates under a clear set of objectives and policies. The fund is an unincorporated non-charitable trust, which provides a very high level of protection for the assets. There is also additional legislation underway to further protect the fund.

As a trust, there are strict protections requiring the fund to be managed with the intent of maintaining the real value of its capital over the long-term.

A trust is a robust and well-known structure that ensures capital is protected for the long-term purpose it is intended for. The fund is managed under a clear set of objectives and policies, including ethical investment considerations.

The fund is structured to provide strict management protections over the fund assets. These include:

• categorising the fund as a strategic asset
• key policies in the Long-term Plan (Auckland Future Fund Policy and Auckland Future Fund Distribution Policy) that restrict decision-making and distributions
• key provisions in the Trust Deed
• the appointment of professional independent directors as trustees
• council-controlled organisation accountability measures.

Decisions will be made independently by the directors of the Auckland Future Fund Trustee Limited, in accordance with the governing documents of the fund. These include a Statement of Intent, Statement of Investment Policy and Objectives, a Trust Deed, Responsible Investment and Distribution policies.

The fund will initially be capitalised with the council’s remaining Auckland International Airport shares. The council is assuming average annual returns of 7.24 per cent per annum from the fund over the long term, after management costs. Of the projected return, 5.24 per cent will be returned to the council as an annual cash distribution, with the remainder retained to protect the real value of the fund over time.  The council may decide to transfer other investments into the fund at a later date.

The Auckland Future Fund Trustee Limited has a board of three independent directors who lead all key decisions — including confirming how the fund will operate and oversight of advisors. The trustees will manage the fund under a clear set of investment objectives and policies.

The council’s long-term financial resilience will be improved by:

• Better protection of the value of the council’s intergenerational assets by holding funds in a trust with independent directors and by diversifying investment over a range of different assets, in different industries and geographic locations.
• Improving cash returns from these investments, reducing the reliance on rates revenue.
• Providing short-term liquidity support in the event of debt market disruption – using some of the fund’s assets temporarily if the council is unable to issue bonds for a short period of time, with the fund to be repaid with interest once the council is able to borrow again when normal conditions resume.

The fund will initially be capitalised with the council’s remaining Auckland Airport shares.

As the objectives for the Auckland Future Fund involve diversifying risk by spreading the fund across a range of investments, it is almost certain that most, if not all, of the Auckland Airport shares will be sold over time.

When and how the Auckland International Airport Ltd (AIAL) shares are sold is a decision for the Auckland Future Fund board. It will be made on the basis of achieving the best financial outcome. The current AIAL holding is 9.71 per cent (as at 6 November 2024).

The 7.24 per cent assumption is for average returns over the long term – we expect some years will exceed this, and other years will be below.

For Auckland Council, it is important to be able to forecast revenue levels in advance to support budgeting for public consultation and rates setting. Therefore, the council would receive the 5.24 per cent cash distribution every year for the first three years. 

If, over a number of years, it became clear the long-term average returns and associated cash distributions needed to be revised, this would be done through a long-term plan process as provided for in the current Auckland Future Fund Distribution Policy.

Auckland Future Fund has been established with a range of protections against future changes that could diminish the value of fund’s assets. These protections include:

• The use of an unincorporated non-charitable trust, which provides a very high level of protection. This includes several key provisions in the trust deed that aim to protect the assets of the fund.
• The fund is a council-controlled organisation, managed by an independent board and professional investment manager. This structure provides independence and assurance to Aucklanders, while requiring a high degree of transparency and accountability back to the council’s Governing Body.
• The fund is categorised as a strategic asset, which limits the ability of the council to make decisions about the ownership or control of the fund without first undertaking full public consultation.
• Key policies in the council’s Long-term Plan (Auckland Future Fund Policy and Auckland Future Fund Distribution Policy) restrict the council’s ability to make decisions about the operation of the fund and about cash distributions from the fund.

The council is also seeking legislative protection for the Auckland Future Fund via a local bill.

Investment, by nature, involves some degree of risk and it is quite likely that the fund will experience ebbs and flows over the years. However, independent advice is that the long-term averages of returns from funds with a similar risk profile to the Auckland Future Fund is 7.24 per cent. The fund also offers a range of benefits for protecting intergenerational assets, diversified investing and greater flexibility to rebalance investments.

In the fund’s modelling, the council provided for fees and overheads of 0.4 per cent per annum. The long-term average returns of 7.24 per cent per annum is after fees. The costs are an estimate and will depend on a number of factors – including the fund’s size, what assets it invests in, legal and governance structures involved, and tax.