VicSuper’s unusually large bias to international equities is set to grow over structural and cyclical concerns on the Australian economy.

The $14 billion fund has 32 per cent of assets in global equities, 18 per cent in Australian equities and 11.5 per cent in emerging market equities. The third annual Casey Quirk/ Top 1000 funds Sentiment Survey of chief investment officers conducted at the end of 2014, found the average allocation for large domestic institutions was 32 per cent in global equities and 29 per cent in domestic equities. AustralianSuper has a 31 per cent strategic allocation to both Australian equities and international equities.

Oscar Fabian, chief investment officer for VicSuper, said: “We are probably different to most super funds of our size, but if anything we will see that split between global and domestic equities increasing rather than decreasing.”

Part of the reason is due to the commodity cycle entering a downturn, but also structural changes in the global economy, particularly through disruption to traditional businesses from the internet.

“The fundamental change from the internet is taking place in the US economy and there is a problem of structural unemployment as a result,” said Fabian. Consequently, he sees unemployment staying high in the economies affected by such disruption, as a significant proportion of the workforce would have the wrong skills going forward.

VicSuper is finishing work on its data warehouse this month, which together with the hiring of Citi as an implementation manager, will help in making the fund a more dynamic investor.

The allocation shift from VicSuper is echoed in the monthly Certitude Global Investing Intentions Index which found only 28 per cent of the 600 investors it surveys believe that the Australian economy will record healthy growth in the next 12 months.

Certitude’s survey interviews 600 investors and found the proportion of those interested in investing in equities for their overseas’ exposure increased significantly in February to 91 per cent, up 6 percentage points.

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