Australian Retirement Trust (ART), the nation’s second-largest superannuation fund, is maintaining its commitment to index investing, citing the inherent difficulties in consistently outperforming the market through active stock picking. ART manages AUD$310 billion and was formed in 2022 from the merger of SunSuper and QSuper. The company aims to help members accumulate capital long-term.
Speaking at the ISDA conference in Sydney, Andrew Fisher, ART’s head of investment strategy, highlighted the current market’s extreme uncertainty, particularly concerning inflation, as a key reason for the fund’s conservative investment approach. Fisher also expressed scepticism regarding the hype surrounding artificial intelligence (AI), arguing that the topic’s ubiquity makes it challenging to gain any real informational advantage. He dismissed popular early investment trends like computer chips and data centres as already well-known opportunities.
Fisher emphasised that diversification remains ART’s top priority, particularly in the face of an unpredictable economic landscape. To that end, he noted that ART is slightly overweight duration, hedging against potential declines in long-term interest rates. In addition, the fund maintains substantial allocations to real assets, including infrastructure such as student housing and retirement living, whose revenues are typically linked to inflation, providing further diversification against interest rate sensitivity.
While acknowledging that equities are currently at the “expensive end of valuations”, Fisher indicated that ART is not planning a major reduction in its sharemarket allocation. He told the audience that he challenged anyone in the industry claiming to have foreseen the current AI boom to show their returns, noting that only a “very small handful” had managed to outperform the index. With the Reserve Bank of Australia holding steady at 3.6 per cent, ART is positioning itself to navigate the uncertainties of both rising and moderating inflation effectively.
