AustralianSuper’s reliance on unlisted assets dragged on performance over the past year, as the rally in listed markets left funds more heavily weighted to equities outperforming their peers.
In a webinar last week, investment communications manager Sam Weaner acknowledged the gap, saying the fund “did face some challenges compared to our peers, largely due to investment style”.
“A key aspect has been the outperformance of listed markets over unlisted markets in recent times. And any peer fund that was primarily invested in listed assets did perform fairly well and did better in the surveys over the past year,” he said.
“For any funds that had a mix of listed assets and unlisted assets were a bit farther down the list. This is one of the challenges that we faced over this past year.”
Still, the fund is doubling down on unlisted assets while scaling up offshore to secure global deal flow. AustralianSuper has about 70 investment staff in London and 40 in New York, giving it access to opportunities that would be difficult to source from Melbourne alone.
Weaner said the fund is constantly scanning regions around the world to broaden its investment universe.
“This adds to the diversity of the portfolio and also assists with return generation and diversification,” Weaner said. “Overall, the team is focused on getting access to assets that can add value and add return and diversity to the portfolio, and also to improve the efficiency of how we manage these assets.”
Around 45 per cent of the fund’s $380 billion portfolio – more than $170 billion – remains invested in Australia, benefiting from domestic economic growth while supporting local industries and infrastructure projects.
Around a quarter of the total portfolio is invested in unlisted assets, both in Australia and offshore.
Back in May, at a Morningstar event, Jessica Melville, head of mid-risk portfolio strategy and research at AustralianSuper, described these private investments as “the ballast in the boat”.
She noted that the fund’s unlisted asset strategy has increasingly depended on global markets, with substantial effort over the past decade devoted to building offshore capability.
“Most of the unlisted assets don’t reside within our borders, and the US is a very important market, so we’ve been thinking about how do we build up to having that presence in the US,” she said.
At the time, Melville said the fund aims to grow its overall staff count in New York to 120 by 2026. Previously, the fund shared its goal for the UK is 300 team members by 2030.
US exceptionalism still intact
Emphasising the importance of the US to the portfolio, Amber Rabinov, head of thematic research, told the webinar last week that the country’s underlying fundamentals make it a critical focus for the fund’s global expansion.
Unlike some peers that called time on the US earlier this year, Rabinov said that while the American exceptionalism narrative has lost some of its shine, “the US still retains its outperformance position”.
“US equities will remain an important part of the portfolio,” she said.
Rabinov explained that a key reason is that the outlook is driven not only by government policy but also by broader macro and thematic forces.
One of the strongest tailwinds in recent years has been the global rollout of AI, she said, noting it has underpinned robust corporate earnings and, in turn, given the fund confidence in the sustainability of the theme as a support for growth-oriented assets such as listed equities and the US equity market.
