Super Review’s one-on-one series aims to spotlight key investment insights from the superannuation sector.
This week, AMP’s chief investment officer, Anna Shelley, explains how the fund is navigating the current investment landscape, which includes a close eye on US shares, infrastructure, and gold.
Given current market conditions, what strategies are you employing to manage risk in your portfolio?
Market conditions are currently benign and there are no explicit risks that we are hedging at this time. The US election is too close to call, so our activities in relation to that revolve around scenario planning.
As a result, our risk management is very much a “business-as-usual” approach: we rely on diversification within and between asset classes in the portfolio; we have an agile Dynamic Asset Allocation program, which can respond to market events; and the breadth of experience of our well-resourced investment team.
What are some key opportunities you foresee in the next year, across asset classes and across global regions?
We are long-term bullish on shares and economic growth, both of which are supported by the combination of stimulative fiscal policy, spending on AI by the large tech firms, and the expected long-term productivity benefits that will result across the broad economy from the harnessing of large language models.
Should there be a meaningful pullback in equity markets, we would view this as an opportunity to increase our exposure, particularly to US shares.
We are looking to increase exposures in direct infrastructure and potentially direct property, but are being highly selective. We will move decisively when we find the right asset with the right economics.
Gold continues to look interesting, even though it has come a long way already. It is a beneficiary of the increased geopolitical tensions of recent years, which show no signs of easing.
The investment landscape has significantly changed in the last few years. Could you elaborate on how AMP’s portfolios have evolved during this time?
Our portfolios have been positioned to take advantage of value-accretive opportunities that can help deliver strong returns for our members as well as the benefits of diversification. We have implemented the following measures:
- A reduction in fees.
- Increases in direct assets, such as infrastructure and credit.
- Decreases in hedge funds and listed property.
- A reallocation of a portion of the active risk and fee budget away from public market stock selection to more reliable and fundamental return drivers, such as credit (public and private markets).
Are there any significant changes or adjustments to your investment strategy that you plan to implement for the next year?
We’ve made meaningful enhancements to our strategy and portfolios in the past two years, which have delivered outstanding results as can be seen in our more recent peer-relative performance.
For the financial year ending 30 June 2024, we delivered returns in excess of 11 per cent for three of our largest member cohorts. A high allocation to global listed equities, together with positive active asset allocation and security selection from several of our underlying managers, helped drive strong returns for our members, with the funds benefiting from positioning for market themes like the strong surge in AI adoption across both the US and global markets. We will be looking to build on this momentum for the year ahead.
We’re very happy with how the portfolios sit now, so any changes are more likely to be opportunistic over the next 12 months.
