The Future Fund has grown to more than $127 billion against a framework of "patience and diligence" in its investments, chairman Peter Costello says.
The fund - which aims to cover the unfunded liabilities of public service superannuation - generated a return of 7.8 per cent from its investments over the past calendar year.
This was comfortably above the fund's target of six per cent for 2016 - the consumer price index plus 4.5 per cent.
At $127.66 billion, the fund has added returns of over $67 billion to the $60.5 billion of contributions made by the former Howard government in 2006 when Mr Costello was treasurer and architect of the fund.
Mr Costello said the object of the fund is to strengthen the long-term financial position of the Commonwealth government, building strong returns while avoiding excessive risk.
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"The board exercises patience and diligence in investing the assets of the fund, ensuring we do not expose the portfolio to undue risks for the sake of short-terms gains," Mr Costello said in the fund's latest quarterly portfolio update on Tuesday.
He said while world equity markets have strengthened over recent months, uncertainty surrounding global monetary policy and a range of geopolitical factors remain.
"Given the uncertain and challenging outlook for investment returns, we are focused on maintaining our discipline to only take risk where it is adequately rewarded," the fund's managing director David Neal said.
