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Current share valuations on the Australian equity market look slightly expensive following the bourse’s 53 per cent rise since bottoming in March at the height of the global financial crisis, the Future Fund says.

Future Fund Board of Guardians chairman David Murray said on Thursday that while the sovereign wealth fund had “dodged a bullet” during the crisis, it was preparing to add a higher mix of risker assets to achieve its returns target.

“Equities have moved from lower than fair value to at, or marginally above, fair value in recent months,” he said after addressing an Australian Institute of Company Directors function in Sydney.

“But we must take a long-term view.”

The fund would have to invest in high risk assets such as equities to accomplish its aim to return 4.5 to 5.5 per cent over inflation over the long-term, Mr Murray said.

“When our fund gets settled in its strategic mix of asset allocation, there will be a high mix of risk assets,” he said.

“That is the only way of achieving that target.”

Mr Murray described the performance of the fund, which was set up by the Howard government in 2006 to cover future superannuation liabilities of public service workers, during the financial crisis as “interesting”

“Briefly, we dodged a bullet during the crisis partly because we had to take time to get established,” he said.

“As a long term investor, you can make timing decisions and we didn’t like the price of equities, so we did not go in too far.

“Our original capital was intact through the crisis and in the latest quarter our returns returned quite significantly more in the positive turn in the markets.”

Mr Murray also said there was a real opportunity for the Australian economy to benefit from investment in companies exposed to strong demand for resources and commodities.

“What investment dollars are available to Australia find their way to the most productive industries and make the most of the continuing boom in commodities and the positive terms of trade that we have,” he said.

“If we can keep building on that, we will do very well.”

Australia’s strong terms of trade – the prices paid for exports compared to imports – as well as improvements in productivity and foreign capital injections would drive the economy going forward, Mr Murray said.

“They are the three things, more than anything else, that will determine whether we come out of this crisis,” he said.

“We went into this crisis better than most.

“The worst thing for us is to go in better than most and come out average.”

Investors had to find businesses that were sustainable and able to lift productivity.

“More importantly, it is to find businesses that can make productivity improvements because the only way out of the tightrope for governments is for productivity improvement itself,” he said.

“Productivity is the key.”

Mr Murray said it was not in the interest of the fund to indicate what it considered fair value for shares in Telstra, of which the fund holds about 10.9 per cent.

“[We] do not share with other people our view of value,” Mr Murray said.

“That is not a very strong position for a seller” he added, referring to the fund’s stated objective to sell down its Telstra stake over time.