Super fund managers looking to smooth the ride

VICSUPER fund managers have given Geelong members an insight into how they have “provided more ballast” in its $19 billion portfolio by reducing its holdings in global equities.

Chief investment officer Andrew Howard said VicSuper had positioned the superannuation fund to smooth the pattern of returns over the next three to five years.

Exposure to global equity markets have been reduced from 65.5 per cent to 56.5 per cent of the portfolio over the past year.

“We have sold down $2 billion in global equities in the last 12 months,” Mr Howard told a forum of more than 100 members at GMHBA Stadium on Wednesday night.

From the start of 2017 to the end of February, 2018, there had been an increase in investment in real assets, from 9.5 per cent to 14.7 per cent, and alternatives.

Mr Howard said the strategy was about positioning the fund, which boasts one in every 10 people in the Geelong community as members, for the long term.

“We are not trying to time the market,” he said.

The key message from Mr Howard and chief executive officer Michael Dundon was not to respond to short-term noise in the market.

"It has been one of the most volatile quarters for some time,” Mr Howard said.

While the Australian economy was broadly sound, VicSuper is expecting a challenging investment environment over the next five years.

Key concerns are any ramifications on global business from a trade war between the US and China and the potential impact of rising interest rates.

Mr Howard noted that it was rare set of circumstances for the US interest rate, which had a base rate of 1.5 to 1.75 per cent, to be tracking higher than the Australia rate which has been steady at 1.5 per cent.

“Our expectation is the Aussie dollar will fall further,” he said.

Mr Dundon, the CEO, outlined the trio of awards the fund won at the Conexus Financial awards and announced the recent rating the fund achieved of 5-Stars (for best value) by Canstar, Australia’s biggest financial comparison site.

VicSuper has more than 238,000 members, 22,000 participating employers and 11,000 pension members.