AGEST buys Aussie equities for first time in a year

The AGEST super fund might have looked like a speculator last Wednesday, plunging $17 million into Australian equities after the market’s biggest one day fall in 18 years. However it was all just policy, according to chief executive Michael Seton.

The $2.9 billion industry fund’s fortnightly portfolio rebalancing happened to fall on Wednesday last week. Unsurprisingly, its Australian equities allocation was down to 28 per cent from its benchmark weight of 30 per cent. In accordance with AGEST’s “disciplined process”, Seton said the Australian equity managers Maple Brown Abbott, GMO, Ausbil Dexia and State Street Global Advisors were duly topped-up to bring the portfolio back to its correct weightings. “Investing on that day had nothing to do with market forecasts; we still have to wait and see what the market does to know if that timing was fortuitous.” It was the first adjustment that AGEST has made to its Australian equities portfolio in over a year. Until now, Australian equities had been held at 30 per cent by redirecting cash flows. “Over the last two years, particularly 2007, we have been increasing the allocation to alternatives,” Seton said. Infrastructure has increased from 4 to 6 per cent, and private equity from 2 to 4 per cent, he said. Taken with absolute returns and hedge funds, AGEST’s alternatives now represent 15 per cent of the portfolio. “It’s mainly for diversification. I think alternatives will continue to grow, particularly in superannuation,” he said. “The investments are long-term, so the liquidity problems alternatives can present are not such a concern for us.”