By Nick Hedley
Australia’s largest superannuation fund is trimming its
exposure to equities amid a market downturn that saw the fund post its first
negative return in 13 years.
AustralianSuper, which manages A$260 billion (US$175
billion) in assets on behalf of 2.6 million members, says its balanced option
delivered a return of -2.7% in the financial year to June 30. This was the
first annual loss for members since the global financial crisis, and the fourth
in 36 years.
The decline takes average annual returns over the past 10
years from AustralianSuper’s balanced option to 9.3%.
The fund’s chief investment officer, Mark Delaney, said in a
statement the slump in equities and bonds had been partially offset by positive
returns in infrastructure, real estate, private equity and credit.
He warned of lower returns ahead, saying: “We’re expecting a
shift from economic expansion to slowdown in the coming years.
“In response, we‘ve shifted the portfolio to a more
defensive strategy. This means we’re increasing our investments in fixed
interest and reducing our investment in growth assets like listed shares.”
AustralianSuper will continue to adjust its asset
allocations to manage risk as the economic cycle progresses, he said.
Nevertheless, opportunities remain.
“As long-term investors, we know that periods of market
volatility can create good investment opportunities. We’re actively looking
for investment opportunities that may have been mispriced by the market in the
short term and to make investments where we see long-term value.”
The firm’s balanced option invests in equities, fixed
income, cash, infrastructure, property, private equity and credit assets.
“We estimate the option could have about five negative
annual returns over any 20-year period,” AustralianSuper said.
AustralianSuper has been bulking itself up through mergers
and acquisitions, having recently absorbed LUCRF Super and Club Plus Super.