“The more confident you are at the start of the year, the more likely you are to be wrong,” Andrew Fisher, general manager of portfolio management and resilience at Australian Retirement Trust, told Investment Magazine in an interview ahead of the release of the fund’s results.
And this year afforded Australia’s super funds plenty of opportunities to be confident – and wrong. A more benign macroeconomic backdrop quickly gave way to chaos as Donald Trump began his second bout with the neoliberal world order, and funds were forced to contend with new tariffs, new conflicts and new technologies that constantly seemed on the brink of reshaping markets.
But ART returned 11.9 per cent in its default high growth option, and 11.2 per cent in its balanced option – and isn’t fretting the backdrop.
“We talk about diversification a lot, but over the last five years, every one of those years, something different has been the reason we’re sitting here saying we got the return we did, right? There’s something in that, and at no point did we predict that.”
This year it was partly an overweight to Australian equities – one of the “quiet achievers”, which ART has long had a higher exposure to than most other large funds, largely because it thinks that, on an after tax basis, it’s a “good place to be” and a better match for its members’ liabilities. It’s still outgrowing the market but it’s making a “conscious decision” to be more committed to domestic investment than some of its peers.
And it was “a good year to be invested here”, Fisher says. Domestic airports did well; data centre operator AirTrunk – sold to Blackstone for about $24 billion – was somewhat more spectacular, and the investment proves Fisher’s point about diversification. After all, ART didn’t buy AirTrunk because it thought artificial intelligence was going to be huge and that there would be a “massive payoff” (ART spent $300 million on a 7 per cent stake in 2020 and walked away from the sale with $1 billion).
“I think back to the case at the time and it we saw it as critical infrastructure for the cloud,” Fisher says.
“That was not a reversing trend – that was a growing trend, and similar to the case around Australian Technology Park and having CBA as an anchor tenant; AirTrunk was all around Microsoft and Google essentially underwriting the build of data centres. You essentially have infrastructure-like expectations around yield. AI was an awful lot of icing on the cake.”
That doesn’t mean ART is now rushing to plough money into AI-related investments, and Fisher is more circumspect on whether AI will be the transformative force its boosters claim – though he thinks that there will be productivity gains and that more jobs will be created as a result of the disruption.
“It’s hard to predict the future on this; it’s one of the reasons why we have confidence in something like indexing, because if you don’t know what’s going to happen, indexing is the best way to cover yourself,” he says.
“And over the last few years it’s worked pretty well being indexed, right? Not too many people have beaten the index trying to predict these things.
“Imagine that, three years ago, someone said to you that Google was disruptable. You would have said that’s impossible. And now here we are; they’re disrupted, right? My kids don’t use Google. They use ChatGPT for everything.”
