UniSuper backs tech despite AI caution

UniSuper has reaffirmed its conviction in the global technology sector after delivering another year of double-digit returns in its Balanced option.

Despite acknowledging technology is likely to continue its stellar run the fund warned valuations in parts of the private artificial intelligence market are showing signs of excess.

The $60 billion superannuation fund's Balanced option returned 10.4% for accumulation members and 11.2% for pension members in the year to 30 June 2026, marking a fourth consecutive year of double-digital returns for members.

Its International Shares option was the strongest performer, returning 17.9%, while Australian Shares delivered 4.7% and Australian Bonds returned 1.2%.

UniSuper chief investment officer John Peace said the global technology boom continued to underpin investment performance, particularly through exposure to the US market and semiconductor companies benefiting from AI infrastructure spending.

"Australia doesn't really have a tech sector to speak of, and as we know, tech is the dominant investment theme of our generation," Pearce said.

While maintaining an overweight position to technology, Pearce said UniSuper had become increasingly    selective and was steering clear of areas where valuations appeared detached from fundamentals.

"I am particularly concerned about the valuations I see in some of these private markets, the unlisted assets," he said.

"The two best examples I can give you are OpenAI and Anthropic... these are companies that are actually losing lots of money without the prospect of making profits for years to come."

Pearce said the fund was also avoiding direct investments in data centres despite strong investor enthusiasm, opting instead to take some profits from parts of its technology exposure while remaining constructive on the sector over the medium term.

Although Australia's share market has continued to lag international equities, Pearce argued the domestic market remained an important portfolio diversifier because of its higher dividend yield and greater resilience during technology-led market corrections.

Looking ahead, Pearce said geopolitical events, including tensions in the Middle East, remained fluid but should not distract long-term investors.

"I think what's important is to block out the noise and focus on the positives in the medium term," he said.