Super funds are recalibrating their strategies in response to evolving geopolitical dynamics and economic policy risks, with major players placing renewed emphasis on research, resilience, and diversification.
As the US administration’s policy moves disrupt long-established trade patterns and capital flows, one of Australia’s largest funds has highlighted the critical importance of fundamental analysis to navigate the evolving investment landscape.
CareSuper, with significant exposure to global markets, is recalibrating its strategies in response to these macro-economic shifts.
Speaking to Super Review, Suzanne Branton, chief investment officer at the fund, said that the current environment signals a fundamental shift in global investment dynamics.
“The policies and actions of the US administration have the potential to meaningfully reshape the global trading system, portfolio capital flows and geopolitical alliances which could have a profound and lasting impact on fundamental drivers of return and risk,” Branton said.
“Staying ahead of these changes, some of which have no real precedent in the context of the current capital market structure, will require deep, critical analysis and research to understand what these dynamics mean for future returns and investment opportunities.
“We could be entering an environment where investment research and analysis is valuable – a ‘new dawn for fundamental analysis’.”
Branton believes CareSuper’s investment strategy is well-suited to effectively manage a more uncertain, volatile market environment.
“While our strategy dampens volatility during stressful market conditions, it also allows the investment team to take advantage of potential investment opportunities,” she said.
Looking forward, Branton said the economic scenarios that guide the fund’s asset allocation are more skewed to the downside.
“The administration’s policies have created a heightened level of uncertainty which will impact business capex, consumption and eventually corporate fundamentals,” she said. “The tariffs will most likely result in higher inflation that will constrain the ability of the Federal Reserve to lower rates as growth falters.”
Branton said that in this “stagflationary” environment, very few assets do well, apart from cash and gold.
On the domestic front, the CIO said Australia should remain somewhat resilient amid rising international tensions.
“Australia, for example, may prove somewhat defensive as the direct impact from tariffs is small, it could benefit from lower cost goods coming from the Asian region and the RBA is forecast to make numerous rate cuts which will benefit households,” she said.
“We have recently upgraded the outlook for Australia reversing a long-held view that the economy, and equity market, would underperform other developed markets.”
Following the fund’s announcement last month that it had reached its peak investment in the US, a spokesperson for UniSuper reiterated that future investments are expected to focus on regions outside the US.
“As is the case with any global investor, we have a very significant exposure to US equities. While this will remain the case new investments are likely to be away from the US, such as Europe and Japan,” the spokesperson told Super Review.
The fund entered the volatile period, ahead of the recent “strong” market rebound, with high levels of liquidity, allowing it to avoid making significant adjustments to the portfolios.
Currently, UniSuper is pricing a global economic slowdown but one short of a recession.
However, speaking on a recent podcast, UniSuper’s head of fixed interest David Colosimo said that even if the US administrator were to cancel all tariffs, “it’s still not clear that the damage can be undone”.
“I think the prospect of a recession will probably stay with us until proven otherwise, and so there’s a lot of uncertainty,” he said.
In March, the median super fund, holding 61–80 per cent in growth assets, dropped by 1.9 per cent as sharemarkets continued to slide amid ongoing tariff concerns, according to Chant West. This decline brought the median return to 5.5 per cent for the first nine months of the financial year.
With markets facing even steeper losses in April, funds are expected to see further reversals in their gains.
