(Bloomberg) -- Australia’s second-largest pension fund is tweaking its so-called life cycle investment strategy, with the A$285 billion ($190 billion) Australian Retirement Trust shifting the default option for its younger members to a higher growth fund from the traditional balanced option. 

From July, ART will move its members under the age of 50 from its balanced pool of investments into its high growth category, where about 65% of their money will be invested in listed equity, 8% private equity and 3% alternatives (i.e. private debt) with a higher allocation to infrastructure than currently.

This compares with the current default balanced investment mix, which has about 30% of money invested in defensive assets. Members between the ages of 50 and 65 will be gradually moved down the risk curve, the fund said, confirming an earlier report by The Australian.  

ART’s move is the latest sign of the intense competition for members and investment returns in Australia’s fast-growing A$3.9 trillion pension pool. The sector will face heavy regulator scrutiny when the Australian Prudential Regulation Authority releases its annual performance metrics in August that rates funds against benchmarks on returns and fees.

Of the top ten biggest funds, Aware Super, in third spot, is among a number of rivals which already have a so-called life cycle strategy which adjusts the investment mix depending on a member’s age or when they are expected to retire. Others including Mercer Superannuation and Colonial First State already offer this type of strategy, while Australia’s largest fund, the A$335 billion AustralianSuper, does not. 

Australia’s pension sector - known locally as superannuation - is expected to finish the financial year with returns greater than 9%, according to an estimate by research firm Chant West. A spokesperson for ART said for FY23/24, the balanced option was tracking for 10% returns, and growth, 11.5%.

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