(Bloomberg) -- Australia’s sovereign wealth fund grew to reach a record A$179 billion ($140 billion) as it notched up another quarter of solid returns.

The Future Fund returned 4.5% in the three months to March 31, and posted the best yearly performance to March since 2017, it said in a statement Thursday. Global equities hit fresh records during the quarter as economies continued to rebound from the pandemic shock of 2020.

“All funds have beaten their target returns across all timeframes,” Chairman Peter Costello said in the statement. “Markets have continued their recovery, driven by the deployment of vaccines, quantitative easing and fiscal stimulus around the world.”

The Future Fund is keeping almost 19% of its portfolio in cash and maintained its equities holdings flat at about one-third of the fund last quarter. Total equity allocation is about 1.6 percentage points below the same time last year as Costello echoed Norway’s sovereign wealth fund in expecting more market volatility.

“With interest rates at historically low levels, markets are very sensitive to any prospect of inflation and rising rates as a consequence,” he said. “The Board recognizes that the investment challenge ahead is significant and is continuing to assess and position the portfolio to generate mandated long-term returns while managing risk.”

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