Sell equities and turn to infrastructure, fund says

SYDNEYA regional airport in the UK and an express railway in Sweden are two places a US$41 billion (RM164 billion) Australian pension fund thinks might be safe from the inevitable end to the economic cycle.

Uncertainty on global trade and a sharper than expected slowdown in China has prompted Sunsuper Pte Ltd to shift more of its money into infrastructure assets, according to chief investment officer Ian Patrick. Meanwhile, the A$55 billion (RM165 billion) pension manager that counts staff at Australia’s central bank and Unilever among clients is paring exposure to listed securities including equities as valuations soar, he said.

“As you get into the late part of the cycle people forget how stretched listed valuations get,” Patrick said in a recent interview in Sydney. “Unlisted valuations don’t get as stretched so there’s relative value there.” The peak of the global economic cycle is probably between 12 months and 18 months away, he added.

Sunsuper has been increasing positions in unlisted assets such as infrastructure and private equity, and buying debt in the property sector, according to the CIO. A stake in airports in Bristol and Birmingham in the UK, and an investment in the train route that serves Stockholm airport, are examples of recent deals, he said.

While the pension fund is not “substantially” cutting its exposure to listed assets, they are becoming increasingly expensive in a relative sense, according to Patrick. — Bloomberg