While AustralianSuper employs bond managers like Challenger-backed Kapstream Capital with reasonably broad alpha-seeking remits, Hopper monitors his outsourced managers carefully lest they succumb to the temptation to be “overweight investment-grade credit and call it ‘alpha’ when they outperform a composite index”. After a build-up in cash and fixed interest allocations that was “part relative performance and part deliberate strategy”, Hopper has seen some redirection of AustralianSuper’s balanced portfolio back into equities during his four-month tenure at the scheme. The fund is well-disposed towards assets with the most to gain from cyclical economic recovery, which does not include developed market Treasuries and government bonds given the stimulus-sapped fiscal position most find themselves in. Hopper says it’s one of those rare occasions where the fundamentals of some emerging market sovereign and financial issuers are stronger than their developed counterparts, given the lessons they learned from the Asian and Latin American crises.