Since the emergence of “Modern Portfolio Theory” and the “Capital Asset Pricing Model” in the late 1960s, institutional investors have taken a quantitatively driven approach to portfolio construction, looking to create portfolio diversification and obtain better risk-adjusted returns by balancing their asset-class exposures. This journey has seen several important advancements in thinking about how to optimally achieve desired results.
Funds that want to take the total portfolio approach first need to get the total portfolio view. To do that they not only need data – and lots of it – but a rock-solid understanding of exactly how they’re going to use it.
AustralianSuper ramps up UK investment as offshore push gathers pace
AustralianSuper will invest more than £8 billion (A$15.6 billion) of new capital into chunky long-term opportunities in the UK across energy transition, digital infrastructure, mixed-use estates and transport and logistics by 2030.
The commitment highlights that the $300 billion super fund’s destiny ultimately lies offshore, and follows its move to station its new deputy CIO, Damian Moloney, in its Kings Cross office in London.
“We have developed a close and supportive relationship with UK government departments focusing on opportunities that can deliver strong, long-term returns for AustralianSuper members, as well as contributing to the UK’s economic growth and prosperity,” said AustralianSuper CEO Paul Schroder.
“Despite ongoing global economic uncertainty, the UK remains an attractive destination for global investors like AustralianSuper which is evidenced by our forecast £8 billion commitment to the market over the rest of this decade.”
The fund highlighted its “significant interests” in the UK, including in the Canada Water urban regeneration project, Peel Ports Group and Vantage Data Centers, as well as its 74 per cent stake in the King’s Cross Estate – one of the few bright spots in a commercial property portfolio CIO Mark Delaney previously described as “the worst of all worlds” owing to its high exposure to retail and underweight to industrial and logistics.
“We’ve already halved inflation, debt is forecast to fall, and – with thanks to smart investors like AustralianSuper – we’re on course to grow the economy.”
Prime Minister Rishi Sunak
The fund manages a $17 billion chunk of its near $60 billion global fixed income portfolio out of the UK and holds over $4.8 billion in UK listed equities. It also recently announced the build-out of a new global equites team in London.
The capital commitment was reaffirmed at a reception hosted by Lord Johnson of Lainston CBE, the UK Minister for Investment, and hailed by UK Prime Minister Rishi Sunak.
“AustralianSuper’s investment in the UK is a vote of confidence in the British economy – proof that our plan is working,” Sunak said. “We’ve already halved inflation, debt is forecast to fall, and – with thanks to smart investors like AustralianSuper – we’re on course to grow the economy.”
Offshore awaits
AustralianSuper’s new capital commitment follows a similar pledge by IFM Investors (of which it is a part owner, along with 16 other industry funds) to sink around A$19 billion into energy transition and infrastructure projects in the UK by 2027.
It also comes off the back of the fund’s decision to elevate Damian Moloney – previously responsible for the build-out of its North American and European offices – to deputy CIO with an eye to further enhancing its offshore presence.
“Since opening our London office in 2016, we have also built strong partnerships with like-minded industry leaders and capital providers, especially in real assets such as property and infrastructure,” Schroder said. “These relationships reflect our approach to direct investing and value creation during ownership, where we’re focused on effective stewardship to generate sustainable returns for more than 3.3 million members.
AustralianSuper currently has around half of its $300 billion FUM invested outside Australia, with around $85 billion invested in the United States and almost $40 billion invested in the UK and Europe.
