Australian Retirement Trust (ART), the nation’s second-largest superannuation fund, has significantly ramped up its trading activity in bonds and equities. Managing over $350 billion in retirement savings, ART employs a dynamic allocation strategy, utilising both its internal 10-person trading desk and external managers to invest members’ funds. The fund has tripled the frequency of its trades to capitalise on the heightened market volatility sparked by global events, particularly the outbreak of war in the Middle East. Jimmy Louca, a senior portfolio manager at ART, noted the marked increase, stating, “In a normal environment, we may trade four to five times per month, but in events like this…that can rise to 12 to 15 times per month. When there’s more opportunity to harvest that volatility, we become more active.”
The increased activity comes as global markets contend with significant turbulence. Geopolitical events, including the US-Iran war in late February, have hurt sentiment, sending Brent crude soaring from US$70 to US$119 a barrel before steadying at US$95. Concurrently, global bonds have seen declines, and the MSCI World Index, tracking major global stocks, has slumped nearly 8 per cent. Locally, the S&P/ASX 200 is down approximately 7.8 per cent since the conflict emerged. While ART’s in-house team primarily focuses on trading broad market indices rather than individual stocks, they have identified attractive opportunities in this environment.
ART has strategically bought into Japanese and European bond and stock markets, observing positive indicators from Japan’s economic boost and Europe’s increased defence spending. Conversely, the fund has trimmed some US stock positions following a recovery. Louca, who heads ART’s multi-asset strategy, highlighted fixed income investments as particularly appealing, regardless of the crisis’s trajectory. He noted that bond markets have offered more attractive opportunities than equities, which have quickly rebounded. ART has built “overweight positions” in UK and German government bonds, which were heavily impacted by the energy crisis. Looking ahead, Louca cautioned against an overemphasis on inflation, urging investors to consider the overlooked threat of recession and suggesting that relief for Australian mortgage holders might not arrive until 2027.
