According to Future Fund Chief Executive Officer Raphael Arndt, “a few percent” of the A$193 billion ($130 billion) of assets under the firm’s management are now in gold, after the fund made its first moves into the broader commodity sphere earlier this year.

He noted that as interest rates rise with inflation, and with the war and deglobalizing ongoing, the conventional 60-40 split of stocks and bonds in a portfolio is no longer necessarily the gold standard model.

In an interview Friday Arndt said, “We want to look for inflation protection. We have started buying commodities, gold — for the first time ever — diversifying our exposures.”

As global equities and bonds have plummeted this year, many investment firms are looking for cushions to help soften the blow of their losses. Arndt says that it is likely as we go forward, heightened geopolitical tensions and deglobalization will only make inflation become stickier, which will force central banks to continue to push more hawkish policy moves to maintain a restrictive environment. This will raise the risks of stagflation, weaken equity positions, and reduce the defensive effects normally played by bonds in a portfolio.

With respect to the traditional 60-40 portfolio split, Arndt said, “It’s not sensible to keep that same approach to portfolio construction.”

Instead, he noted his fund will look to assets which will protect against rising prices, focusing on commodities and real assets, with some venture capital, private equity, and hedge funds. In the interim, the fund just took on a 3% stake in the Sydney Airport.