SYDNEY, Aug 31 (Reuters) - Australia's sovereign wealth fund said it made an 8.7 percent return on investment in the latest financial year, handily beating its target as it benefited from persistently low interest rates and improved economic conditions.
The rate of return for the 11-year-old Future Fund in the year to end-June compared to its target of 6.4 percent. Earlier this year, the Future Fund lowered its target by half a percentage point, citing uncertain conditions.
"Looking at the investment environment, markets have been buoyant over the last year on the back of an improvement in economic conditions across many of the major economies," said Future Fund Chairman Peter Costello in a statement.
"Key to this has been the continued accommodative monetary policy settings," Costello added.
The fund's return for fiscal 2017 compared to a return of 5.8 percent the prior year.
The fund's value stood at A$133 billion ($105.12 billion) at June 30, up from A$129.6 billion at the end of March, it said.
The Future Fund was set up in 2006 with contributions of A$60.5 billion to cover pension liabilities for public servants. ($1 = 1.2652 Australian dollars) (Editing by Byron Kaye and Stephen Coates)