AustralianSuper, the nation’s largest pension fund, is preparing for an “opportunity rich” environment in global markets as high interest rates weigh heavier on asset prices.
(Bloomberg) — AustralianSuper, the nation’s largest pension fund, is preparing for an “opportunity rich” environment in global markets as high interest rates weigh heavier on asset prices.
The fund, which has seen assets under management surge to A$300 billion ($200 billion) thanks to rising inflows, has “a very large amount of money” to spend, Chief Investment Officer Mark Delaney said in an interview. Around 20% of its holdings are in cash and fixed income, one of the highest combined allocations yet, he said.
“We’re hopeful that there’ll be good opportunities emerging over the next two to three years as the effective high interest rates feed through to the economy,” said Delaney. “And we’ve got funding available to take advantage of it.”
AustralianSuper has started to redeploy some its cash into fixed interest, said Delaney, who told Bloomberg in March that he favored buying more bonds as a ballast against the coming economic downturn. The investment chief said on Wednesday that he’d be eyeing other opportunities in fixed interest, stocks, private equity, infrastructure and property “as they arise”.
The fund recently embarked on a hiring spree in New York and London, with a focus on recruiting staff across its private equity, private debt and infrastructure units.
A $185 Billion Australian Fund Ramps Up New York, London Hiring
AustralianSuper on Wednesday posted an 8.2% return for its main balanced fund for the fiscal year through June, largely thanks to strong growth in global equity markets. One of the rare weak performers was property, which has suffered from writedowns of up to 10% mainly in office towers, said Delaney. That included the fund’s stake in the massive King’s Cross redevelopment in London.
The fund’s closest rival, A$240 billion Australian Retirement Trust, this week told Blooomberg its office valuations were down as much as 20%, while A$73 billion pension fund Cbus has written down some real estate by as much as 10%, according to press reports last week.
Delaney said the fund’s core outlook was that the impact of high interest rates will “slow economic activity materially.”
“We’re starting to warehouse or build up cash with the idea that we can deploy that into other investments as pricing gets better over the next two to three years,” said Delaney.
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