A massive Australian retirement fund worth $240 billion is stepping up its global investment activity, purchasing more stocks and bonds in volatile markets affected by ongoing Middle East conflicts.
The Australian Retirement Trust, the nation’s second-largest pension fund managing A$350 billion in assets, has shifted from its typical weekly trading pattern to daily transactions, according to senior portfolio manager Jimmy Louca.
The fund operates with a flexible investment approach that allows managers to buy and sell assets through an internal trading operation based on changing market values across different regions and countries.
“Whereas in something like this, we’re trading almost every day, and this drawdown is still early and still going … If (the decline) picks up we will pick up our activity to take advantage of cheaper assets,” Louca explained during a recent interview.
Australian pension funds, called superannuation funds domestically, have emerged as significant global investment players with approximately A$4.5 trillion under management. An increasing share of this capital is being invested in international markets.
The retirement trust has expanded its stock holdings over recent weeks, with Louca noting particular focus on regions hit hardest by the current crisis. “But we’ve increased them more in those markets that have been impacted more from this crisis – which is mostly energy importers, given we know that they’re the ones that’ll turn around the most once there’s a resolution and provide the most attractive entry points at the moment,” he stated.
Japan and Europe represent key target markets where the fund has boosted its positions, specifically favoring Japanese financial companies and European defense industry stocks.
Market performance data shows Japan’s Nikkei index is tracking toward a 12% decline for March, marking its steepest drop since 2008. Meanwhile, Australia’s primary S&P/ASX 200 benchmark has fallen 8.2% due partly to mining stock selloffs, approaching its largest monthly decrease since 2022.
The fund has also expanded its British and Australian bond investments, where interest rates have climbed as global investors recalibrate expectations for future rate increases amid anticipated inflation spikes related to the Iran situation.
British government bond markets have experienced their worst monthly performance since 2022, with two-year yields jumping 96 basis points since the conflict began as investors prepare for potential rate hikes.
Performance data indicates the Australian Retirement Trust delivered a 9.6% annual return in its balanced portfolio, surpassing the sector average of 8.8% through December, based on the latest available SuperRatings figures.
