The US remains a standout destination for innovation and commercialisation, according to MLC Asset Management chief investment officer Dan Farmer.
It comes as MLC reported robust superannuation performance for FY2024–25. The group’s High Growth option returned 11.4 per cent, while its MySuper Growth option delivered a solid 10.1 per cent.
Farmer attributed the strong performance to disciplined asset allocation and broad diversification across portfolios, highlighting the contribution of both global and Australian equities in navigating what he described as a noisy investment environment.
“This year was one of the noisiest we’ve had in a while, but despite the noise, we have delivered strong returns and good outcomes for members, against a volatile market backdrop,” he said earlier this month.
“We remained calm and disciplined, held equity weights and that has put us in pretty good stead over the year.”
Speaking to InvestorDaily this week, Farmer said that despite all the noise – including fresh tariff announcements – “at a very high level, we still think the US is an exceptional market”.
“Company and market valuations wax and wane, but the US remains a country with many high-quality businesses,” he said.
“It is still a hub for innovation and commercialisation. We don’t see that changing in a hurry.”
Tariffs, he said, have become the “geopolitical issue du jour”, and their influence on global markets is impossible to ignore.
“However, we think it’s more sensible to respond to concrete policy actions from Washington rather than jump at every comment and social media post,” Farmer said.
This perspective, he said, informed the fund’s behaviour during April’s market volatility following the “Liberation Day” tariff announcements. Namely, rather than following the market, the fund at the time rebalanced its global equity holdings back to its neutral benchmarks.
“While it can be tempting to go underweight at such times, our investment process is very disciplined, and we didn’t follow the trend. Instead, we looked through it,” Farmer said.
Farmer views the latest tariff rhetoric from Washington – including the newly extended deadline to 1 August – as a sign of mounting “frustration” over stalled bilateral negotiations following the so-called “Liberation Day” announcement.
While the threatened tariff hikes would lift the effective rate from around 12 per cent to 20 per cent – a “considerable re-escalation” – Farmer noted that the proposed increase still falls short of the peak levels seen during the original Liberation Day period.
“If the past is any sort of guide to the future, we’re unlikely to see the implementation of the latest tariffs,” Farmer said, adding that they are intended as a negotiating tool with deals likely close with Canada, Mexico, Korea, Japan and Europe.
“These may not come before August 1, but there are reasonable odds that agreements will eventually be reached, and so we think that reacting to phantom tariff rates isn’t prudent,” he added.
While he does expect effective tariff rates to move higher over coming months, in the medium term he said “the range of expectations still sits somewhere in a manageable range”.
“The market is pricing in this direction so far, with only modest falls to risk assets. There are short-term risks, but we think they are unlikely to persist.”
Earlier this month, Farmer highlighted private credit, infrastructure and alternatives as strong performers over the past financial year, adding that “diversification and disciplined asset allocation” remained the fund’s strategic bedrock.
Looking ahead, at the time, he said he sees selective opportunities in segments that have underperformed in recent years, including unlisted property and retail.
“Looking forward we will remain selective, measured and diversified; but we see opportunities in infrastructure, credit and areas that have been ‘beaten up’ in recent years, including unlisted property and retail,” Farmer added.
“While we’ve typically been underweight in some of these areas, we’re now upping our weights and finding new opportunities for our members”.
