Treasurer Wayne Swan said on Wednesday that Australian Stock Exchange (ASX) Chairman David Gonski on Wednesday will head the $77-billion Australian Future Fund. He will also run the Nation-building funds that will invest in infrastructure projects.

Mr Gonski was appointed by Prime Minister Julia Gillard to replace David Murray. She also named Stephen Harker to the fund's board. Mr Harker is the chief executive of Morgan Stanley's Australian unit. He will replace founding board member Brian Watson.

The fund was established in 2008 by then Prime Minister John Howard. It pays pension costs for retiring politicians, judges and other public employees. The fund is supervised by the treasurer.

It is the 13th largest sovereign wealth fund in the world, according to the Sovereign Wealth Fund Institute. The largest is the Abu Dhabi Investment Authority valued at $827 billion.

About 10.8 per cent of the Australian Future Fund is invested in Australian shares and 15.7 per cent in global developed markets. Another 19.8 per cent or $14.6 billion is invested in hedge funds and the balance is in private equity, property infrastructure, debt and cash.

Mr Murray, who was also former chief executive of Commonwealth Bank, was extended for another 12 months in 2011. He will continue to serve as honorary chairman of the International Forum of Sovereign Wealth Funds until 2013.

Mr Gonski will serve as chair of the fund beginning April 3. He will have a five-year term. Mr Gonski also chairs Investec Bank, Coca-Cola Amatil and Ingeus, and is director of Singapore Airlines, where he will step down by July. He will end his term as ASX chair on June 30, 2012.

"These appointments will bring a unique combination of experience and strategic insight across business, corporate governance and investments markets, and will position the board well for the opportunities and challenges ahead," Mr Swan said in a statement.

In turn, two people are the front runners to replace Mr Gonski at the ASX. They are Rick Holliday-Smith and Jillian Broadbent. Ms Broadbent would have been the ideal replacement since Mr Gonski has supported more female executives in senior corporate roles, but because of her seat at the Reserve Bank of Australia, which is ASX regulator, there is conflict due to the overlap and may rule her out.

Mr Holliday-Smith is a career banker who favours derivatives. He is also chair of Cochlear and Servcorp. He run Hong Kong Bank in London and the Chicago Research and Trading Corporation in the 1980s and 1990s. He has been on the ASX board for six years.

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