(Bloomberg) -- Investment chiefs at big Australian pension funds are honing in on private assets for next year as a key source of growth for the nation’s booming A$4.1 trillion ($2.6 trillion) industry.
Aware Super, Australian Retirement Trust, UniSuper and Colonial First State — which oversee more than A$800 billion combined — all said they’re looking to increase unlisted market exposure in 2025.
With more money looking for a non-listed home, that’s likely to increase the already heightened scrutiny on private asset valuations as billions of dollars of compulsory inflows arrive each week in the world’s fourth-largest retirement system. About half of Australia’s pension pool is currently invested outside the country and a growing number of funds have opened overseas offices to get better access to private-market deals.
Here’s a look at where the big players are focusing attention heading into next year:
UniSuper
UniSuper expects to build up its private credit allocation, which at the current level of 1% is lower than some rival pensions. Head of Australian Equities Penny Heard said she’s starting to build up cash levels, looking for “better opportunities, be it in equities or otherwise.” Her firm has about A$139 billion under management.
Australian Retirement Trust
ART, the country’s second-largest pension, plans to boost its 30% allocation to unlisted markets across its high growth and balanced investment options. “We’ll be looking to rotate out of listed markets toward more illiquid,” Head of Investment Strategy Andrew Fisher said. Areas of interest include digital infrastructure, such as data centers, as well as land titles and motor registries.
Fisher said the fund, which has about A$330 billion, will still need to be choosy when weighing up whether to shift money away from stocks. “If we can’t find something that we think is better than equities, then we wouldn’t move the money,” Fisher said. Unlisted assets will rise by about 2-3 percentage points in the coming years, Fisher said, without specifying the time period. The pension fund already has retirement living in the UK, student housing in Norway and multifamily living in the US.
Aware Super
Australia’s third-biggest pension, A$184 billion Aware Super, is looking to add office, retail and residential housing to its existing unlisted markets allocation of 25-27%. Aware Super recently invested in a Brisbane office building, and is looking for more, Chief Investment Officer Damian Graham said.
The firm has a goal to invest “a couple of billion dollars or so in property” and across the other sectors, he said, citing private equity, infrastructure and private credit as areas the fund would spend in. Graham expects deal flow to pick up throughout 2025. Aware has about 11% in infrastructure and 6% in property.
Colonial First State
Colonial First State CIO Jonathan Armitage is focusing on smaller-cap companies that he expects will benefit from policies high on the agenda of US President-elect Donald Trump. CFS currently has about 30% of its balanced investment option in global equities and while that is unlikely to materially change, the composition of investments is being tweaked.
CFS is also taking money out of listed real estate and infrastructure in favor of unlisted infrastructure and private equity. The firm manages about A$160 billion.
QIC
QIC has more than A$111 billion under management, with about half of that money invested for the Queensland government, and the rest on behalf of clients including pension funds. QIC Chief Economist Matthew Peter noted that the “tremendous run” that stock markets have had is “running out of steam.”
The prospects for 2025 depend largely “on which version of Trump turns up,” Peter said. “Real estate is now coming back into the frame,” he added.
Brighter Super
Brighter Super CIO Mark Rider is looking to add more to the fund’s infrastructure and private equity portfolios. The Brisbane-based pension with A$33 billion will increase its infrastructure allocation from about 8% to 10% of its default fund, where most of its customers are. The change will happen over the next two to three years, he said.
“It could be an airport, it could be a toll road, it can be a battery, it can be a data center, it can be fiber networks,” Rider said of the assets he’s looking to buy.
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