Australia’s private credit boom and Perpetual’s torturous takeover and demerger process means big chunks of the mid custody market are up for grabs, according to Equity Trustees.
With uncertainty looming from Trump tariffs to the impact of DeepSeek on AI, Amundi is focussing on global equity opportunities, diversifying with gold and maintaining a tactical approach to duration.
‘Lots of uncertainty’ prompts portfolio rethink at Brighter Super
Having brought together three funds in three years, Brighter Super CIO Mark Rider is now “trying to make the portfolio fit for the period we’re going into” – one where there will be increased macro volatility, higher inflation and the disruptive force of deglobalisation.
“So we’re trying to make the portfolio more robust to all that,” Rider tells ISN.
That means increasing the allocation to infrastructure, which Brighter prizes for the protection it can offer against higher inflation and weaker economic conditions, and handing over a nearly $3 billion chunk of its previously largely-passive equities portfolio to around 10 active managers across domestic and international equities.
“That’s a reaction to concentration risks, but it also reflects the benefit of the mergers we’ve been through… we’ve been able to put this (active management) in the portfolio at the fee levels we want to be at,” Rider says.
The investment team is also casting an opportunistic eye over the mangled commercial property sector, “which may turn out to be more resilient than some of the high-flyers”, and building out its dynamic asset allocation (DAA) program with advice from Morningstar – Suncorp Super’s asset consultant – to take advantage of market dislocations.
“We’re focussing more at the extremes, where the risk/reward is more in our favour, rather than having that (DAA program) always turned on and running very complex strategies,” Rider says. “So it’s very much suited to the resourcing and the philosophy of the fund.”
The fund racked up double-digit returns across multiple products in 2024, and there’s plenty of reasons to be optimistic about 2025: that economic growth is picking up, inflation is coming down, and there’s room for rate cuts even though unemployment remains low. Earnings expectations have held up, even if valuations are stretched. Tech has run hard; Rider expects there will be a broadening out of market leadership.
“The baseline is that it probably won’t be another bad year,” Rider says. “But there are some big uncertainties that are making it pretty challenging to deal with.”
The arrival of DeepSeek on the scene showed how fragile market sentiment can be, while investors already have whiplash from the speed at which Trump imposed 25 per cent tariffs on Canada and Mexico and then rolled them back. There’s probably a lot more where that came from.
“That volatility is going to be quite significant,” Rider says. “Whether that ends up being a negative for the market or not does depend on how hard he moves on policies like tariffs – do you get a very broad outbreak? Does he bring Europe into it? Is there retaliation? – along with other policies, like immigration.”
But you can’t try and forecast every twist and turn, Rider says.
“If we had a crystal ball we’d know exactly when to move out of risk assets and into defensive assets. We don’t. But we have a general view that the Trump volatility and some of the inflation risk coming through from that, and deglobalisation, that they’re some of the things we’ve been thinking about as we build the portfolio.”
