The Future Fund posted an annual return of 22.2 per cent in the year to June, the strongest result in its history.
The fund - set up in 2006 to cover future superannuation liabilities of public servants - now stands at $196.8 billion, having earned $35.7 billion in 2020/21.
Chair and architect of the fund Peter Costello said this was an "exceptional result".
The fund's 10-year return of 10.1 per cent compared with its target of 6.1 per cent - the consumer price index plus four to five per cent per year.
The fund has now tripled from the $60.5 billion initially contributed by the federal government when Mr Costello was treasurer.
"The Future Fund is the Commonwealth government's largest financial asset," Mr Costello said.
"This financial asset strengthens the Commonwealth's long-term financial position."
Mr Costello said the result encompassed both the health and economic disruption of the COVID-19 pandemic.
The financial recovery since has been driven by the deployment of vaccines, rising confidence and supportive monetary and fiscal policy.
"While the near-term economic outlook is brighter than it was a year ago, much of Australia is still in lockdown and longer-term there remains uncertainty on the unwinding of stimulus," he said.
He said the pandemic has also heightened pre-existing tensions between global powers, creating a challenging environment for investors.
The fund's chief executive officer Raphael Arndt expects it will be harder to reproduce this strong result in the medium term given the shifts in the investment environment created by the pandemic.
He said listed equity markets performed strongly, while the fund's significant exposure to private equity has delivered excellent returns.
"During the year we committed to additional opportunities in Australian infrastructure, notably through a further investment into Powering Australian Renewables (PowAR), and a new partnership with Telstra InfraCo Towers," Dr Arndt said.
The fund also runs five other portfolios, bringing total funds under its management to a total of $245.8 billion as of June.
These are the Medical Research Future Fund, the Aboriginal and Torres Strait Islander Land and Sea Fund, the Future Drought Fund, the Emergency Response Fund and the DisabilityCare Australia Fund.
