Future Fund cautious as markets tank

The Future Fund is holding just over a fifth of its $118 billion portfolio in cash, wary of the drop in equity markets that have dominated this year.

The Future Fund has poured just over a fifth of its $118.4 billion portfolio into cash, taking a cautious view on the global investment outlook.

"We have taken risk out of the portfolio and we are relatively cautious at this point," the fund's managing director David Neal told a Senate estimates hearing.

His comments came as the Australian stock market tumbled more than two per cent on Tuesday following a weak finish in the US on worries over the global outlook and even bigger losses in European shares.