AMP’s strong 2024–25 returns were anything but a fluke – they were the product of a carefully recalibrated investment strategy that began several years ago, when the fund first became truly cognisant of its shortcomings.
About three years ago, AMP Super took a hard look at itself – a review that triggered a series of significant changes, laying the foundation for the strong performance it’s now delivering.
Among the most critical was a recognition that its traditional reliance on “skill-based sources of return” – namely, public markets, stock selection, and hedge funds – was no longer sufficient.
In response, the fund shifted much of its public market exposure into indexed strategies, freeing up both its fee and active risk budget to target private credit and direct infrastructure.
Speaking to Super Review sister brand InvestorDaily, AMP’s head of portfolio management, Stuart Eliot, said these segments of the private markets have seen the most allocation movement in recent years.
“We have been increasing our allocation into direct infrastructure, that’s been mostly directed to Australia and Europe. There was no foreseeing US tax policy in that, that was just where we saw opportunities at the time,” Eliot said.
Another area once largely overlooked by the fund – but now helping to drive stronger returns – is direct property exposure.
Here, AMP Super has sought out discounted parcels, acquiring them at what Eliot described as “quite attractive discounts”.
“It’s all of these things that have come together to result in much more reliable sources of return than we were seeing in the past,” he said.
Importantly, AMP’s broader strategy doesn’t lean too heavily on any one sector or region. Instead, the fund is embracing a dynamic rebalancing approach – one that blends active and passive exposures – positioning itself to capitalise on opportunities as they arise.
“We’re really benchmark weighted if you’d like, a lot of what we do is using our own index funds and they help us navigate times like April when markets are really volatile,” Eliot said.
“We don’t have any explicit tilts to any market … we’ve just been rigorously rebalancing back to our benchmarks whenever we drift a little bit away from them.”
On the active side of things, he acknowledged active management has been difficult.
“That’s how I would describe it,” Eliot said. “In terms of asset class directions or sectors, I think it’s been possible to pick up on themes like the AI theme and do quite well from that. I think a lot stock selection alpha has been really struggling, but the more quantitative strategies that we use, say our international equities, has done really, really well in the last year.”
While AMP Super doesn’t necessarily prefer one theme over another, if there’s one Eliot is particularly bullish on, it’s AI.
“We still have many years of productivity benefits of AI coming through,” he said.
“It’s feasible that at some point in the future, LLMs become more of a utility and the benefit to shares in the economy is really through the rest of the companies in the world, at least the ones that use computers, actually finding incremental improvements to productivity and all that ends up leading to economic growth and earnings growth.”
One of the “fun things” about large language models (LLMs) and AI-driven firms, he added, is their potential to emerge from anywhere.
“There’s this hunt now for the first company with one employee and a billion-dollar valuation. That, and companies like it, can spring up anywhere,” Eliot said.
As for promising markets, Eliot is excited about China.
“I am more interested in China as an investment destination than I have been for a long time. There’s a lot of really good stuff happening there, it’s just whether or not they can convert it from GDP growth into earnings per share growth,” he told InvestorDaily.
Regarding the US, while AMP Super reduced its overweight position in February and is now not overweight in any single market or theme, Eliot cautioned: “Don’t underestimate the skill of Trump and the people around him.
“Those people that assume he is an idiot will probably not get great investment results.
“I think over the medium-term, innovation trumps government, and so we’re looking more at any noise, particularly another sell-off would be an excellent opportunity to be exposed to the next leg of economic growth.”
Reflecting on the legislative outlook and the current political climate, Eliot added: “If you get all the bad stuff out of the way first then coming into the mid-terms, you’ve got progressively better things which might facilitate a better majority into the second half of the presidency which would help them immeasurably in terms of getting policy done.”
On bitcoin
AMP Super maintains a tightly controlled, modest allocation to bitcoin within its broader dynamic asset allocation framework, with exposure remaining well below 1 per cent of the portfolio.
While often viewed sceptically by its peers, the fund’s investment case for bitcoin is underpinned by extensive research, positioning it as an emerging store of value in an increasingly digital world.
“The investment case we have for it, which we spent a lot of time researching, is as an emerging store of value asset as the world becomes a lot more digital,” Eliot said.
Comparing bitcoin to traditional assets such as gold, equities, and property, the research suggests bitcoin rates highly across most criteria for a “perfect store of money” – the notable exception being its relatively short track record.
“We see it like digital gold and similar investment case… we see them both – gold and bitcoin – as quite good hedges for inflation and monetary debasement,” Eliot said.
The increasing institutionalisation of bitcoin has brought greater fiduciary exposure, which Eliot regards as a critical development for its role in portfolios.
“I agree, there is a lot more fiduciary exposure. I think that’s a really important way to think about it,” Eliot said.
He emphasised bitcoin’s complementary role alongside traditional asset classes: “The purpose of it is much more defensive in the portfolio. Your shares will do well in periods of economic growth, your bonds will do well in downturns, but neither of them will necessarily do well in periods of high inflation. Whereas that is the perfect environment for assets like gold and bitcoin.”
