Aware Super chief investment officer Damian Graham says the super fund is focused on building its unlisted infrastructure portfolio before it puts any more of its cash into stocks.
Following the COVID crash in the first quarter last year, Graham said Aware was able to bounce back, finishing the year around 5% above the benchmark.
"As a fund we feel we're in pretty good shape. We did a lot of work to figure out what risk exposures and liquidities were," he said.
"We really wanted to define as much as possible how much liquidity we had to be able to take advantage of opportunities."
Speaking at a Bloomberg event Graham said the fund did not see as many opportunities as it thought there might be due to government assistance giving businesses access to liquidity.
While Graham said this helped support many, it also elongated the dynamic between extremely low interest rates alongside very high multiples.
"With incredibly low interest rates and the very strong rhetoric, even from the RBA, that rates aren't going anywhere for a number of years is allowing people to say the discount rates they used to value assets are going to stay very low for quite some time," Graham said.
"That is going to allow the multiples on those earnings and revenues to be incredibly high."
Graham added that while the businesses do have very high multiples, they are the ones who have been profiting from the lockdown measures, so it is understandable, just not enticing.
"When I look at 2021 it's hard to see that there will be any significant changes that will knock that dynamic off," he said.
"Obviously, markets are hard to forecast and we are in a time with very high valuations and very low margins of safety. So, it doesn't seem there is a huge amount of change coming that would really drive some profit being taken, but again I think there is a lot of cash on the sidelines that would likely see some buying if that did occur."
Graham said while Aware still holds equities, he is not in a hurry to go overweight in the coming year.
"I think we have a solid exposure to equities; internationally probably a little bit more than domestic, but we have a pretty solid exposure to both," Graham said.
"We're looking to increase our unlisted assets. We have been on that journey for the last five to seven years, where we have been incrementally adding to unlisted assets."
Graham said Aware is not seeking to invest in traditional, mature infrastructure or property assets, but instead to take risks in their area.
"I think the risks that you want to try and take right now are a little different than just trying to buy very mature assets," he said.
"I think there is an opportunity to buy and build them to core or develop them. We have had some great success in that over the last few years."
Graham said he believes there is an opportunity to continue to build up Aware's exposure in the unlisted market and build those up to be good core assets.
"We will remain very well exposed to equities, but I do think they are highly priced, but we're not foreseeing an 'any-minute' pull back," he said.
"We're not looking to heavily allocate more into equities. We expect to continue to invest in a broad range of assets."