In The AFR I consider the question of whether the Future Fund should lower its currently lofty CPI plus 4.5% to 5.5% return target after a decade of outperformance and argue that if it is in the alpha-generating business returns are only constrained by the inefficiency of the asset-classes available to it and the quantum of capital it can deploy into these markets. I go on to consider the relative efficiency of listed equities, currencies, interest rates, bonds and property. Excerpt: "There are tremendous divergences in the price efficiency of different investment classes, which is a function of their informational transparency and competitive intensity. The number of active players hunting alpha is in turn determined by the economic incentives investors are willing to provide for delegated portfolio management, which vary wildly. Active fixed-income funds are paid a pittance while their stock-jockey brethren are rewarded like kings notwithstanding the superior risk-adjusted returns offered by investment-grade bonds. This draws wannabe active investors, and top talent, into equities while pithy fees compel many bond bandits to become closet index-huggers. Free (VIEW LINK)