Markets not so super
Difficult conditions for state’s big funds
QUEENSLAND’S biggest superannuation funds have joined growing skittishness about stock investments amid rising concerns about global trade wars and inflation.
QSuper, which manages $72 billion in pension funds, said that while equities had been strong in recent years, it remained difficult to forecast how this could be sustained.
Sunsuper, the Brisbanebased manager of $55 billion in funds, says it has been reducing its allocation to equities and lifting investment in pri- vate equity, property and infrastructure.
QSuper chief investment officer Brad Holzberger said QSuper would continue to stick to a more diversified investment strategy, especially when it came to equities.
“We don’t rely on the performance of the sharemarket or any one asset class,” said Mr Holzberger. “We see a 60 per cent to 70 per cent allocation to equity as a big bet which may pay off when markets are strong but could be equally costly when markets fall.”
Prior to 2009, QSuper had an equity weighting of around 55 per cent but felt that was too high.
“We know that in a year of unexpected downturn, like the Global Financial Crisis, equities exposure at that level can produce losses of up to 25 per cent,” said Mr Holzberger.
Sunsuper chief investment officer Ian Patrick said concerns about trade wars and rising inflation in the US were impacting on stock markets.
“It can be very difficult to pick the turning point in the market and you can become defensive too early,” Mr Patrick said, adding corporate earnings remain strong.
Mr Patrick said Sunsuper’s flagship balance fund had about a 60 per cent allocation to listed equities and would reduce that progressively by between 2½ and 3½ per cent.
Both QSuper and Sunsuper join Australia’s biggest superannuation fund, AustralianSuper, in expressing concerns QSuper chief investment officer Brad Holzberger that future stock market gains may be limited.
AustralianSuper last week said it will reduce its exposure to the sharemarket amid expectations interest rate hikes overseas will bring an end to the equities boom.
AustralianSuper has about 62 per cent of its cash invested in listed equities. By contrast, QSuper’s balanced fund held 36.9 per cent in equities, 23.5 per cent in fixed interest and the rest in other asset classes including real estate, infrastructure and cash. QSuper’s balanced fund returned 6.87 per cent during the financial year with a 10-year annual performance of 6.75 per cent. AustralianSuper’s balanced option returned 11.08 per cent over the financial year to June and 10.51 per cent annually over the past five years.
Sunsuper’s balanced fund returned 10.7 per cent last year and 6.9 per cent annual over the past decade. The benchmark ASX 200 Index returned 8.3 per cent last financial year and has had a 1.9 per cent annual return average over the past decade.