An $8.6 billion industry superannuation fund is gearing up its first private equity play in almost half a decade, as it readies for an environment of lower returns.
Australian Catholic Superannuation Retirement Fund chief investment officer Michael Block told Financial Standard the fund is currently looking at private equity managers with a mandate to follow soon.
"We have some very small, legacy positions as a result of the mergers over the fund's history. But we now are now looking at starting a position," Block said.
The Sydney-based fund has increased its exposure to bonds, US dollars and real assets as it sees volatility ahead. It has trimmed its US and Aussie equities exposures because it believes valuations are over-heated by artificially low interest rates.
|Sponsored by BNP Paribas|
The race for ESG leadership in APAC takes shape
Its bond option is now the top performer on SelectingSuper personal super performance tables to March 13, with a 6.5% return over the year and the investments are managed through Ardea, Coolabah and Kapstream.
The fund took a decision to hold longer duration bonds, moving away from cash plus and inflation plus products.
"We wanted to ensure our bond product was true to label with duration matching the index," he said.
It has also increased real assets exposure by building up existing positions.
"We were presented with the opportunity to buy quality real assets (infrastructure and property assets) at less than valuations and have taken advantage of that situation to increase our holdings in [these] funds like ISPT (property), EIT (infrastructure, in particular renewables) and AMP (property)."
ACRF adjusts its strategic asset allocation dynamically. All investments are managed through external managers and the super fund often seeds new strategies early in their life to take advantage of cornerstone fees.
The SAA that comes into effect in July will see it combine its multi-asset allocations with alternatives.
"We have decided to combine them because multi-asset managers have underperformed in a rising market, as compared to other parts of the portfolio."