The top funds in Australia’s A$4.1 trillion ($2.7 trillion) pension industry are eyeing opportunities beyond the US, saying stock valuations there look stretched and President Donald Trump’s policies are increasing volatility.
AustralianSuper, the nation’s largest pension fund, has ended its overweight position in global equities, of which US shares make up the largest proportion, citing the geopolitical uncertainties caused by Trump’s changes. Colonial First State has tilted its portfolio toward emerging markets given its desire to diversify away from US equities, which it considers are expensive.
One turning point in their view of US investments came in February with the so-called “revenge tax” embedded in Trump’s “Big Beautiful Bill,” that would have increased levies on income from US assets held by investors from countries such as Australia. While that measure was ultimately removed from the bill, it did enough to damage sentiment.
In addition to emerging markets, pension firms in Australia are putting more money into alternative investments like private equity, and niche products such as insurance bonds and asset-backed financing.
Here are comments from Australia’s biggest pension managers about their investment plans for the second half of 2025:
AustralianSuper — Oversees A$365 billion in assets
“The geopolitical environment is more volatile now than it was two or three years prior to that as Trump’s changes are being put through,” said Mark Delaney, chief investment officer in Melbourne. Tariffs, for instance, will likely slow growth but not trigger a US recession, only marginally weakening the appeal of US stocks, he said.
The fund has trimmed an overweight position in US equities but is unlikely to go underweight given the market’s robust profit growth. “If that changes, then the US will become less attractive and the valuations won’t hold,” Delaney said.
AustralianSuper is looking to finalize deals with four private equity fund managers as it builds out unlisted holdings and remains bullish on infrastructure. “Infrastructure returns we think still look pretty solid,” Delaney said. Within the infrastructure sector, utility assets look relatively attractive because their valuations haven’t tracked artificial intelligence-related investments, such as data centers, he said.
Colonial First State — A$168 billion
The money manager has tilted its portfolio toward emerging markets while boosting private credit and deployed money into private equity for the first time, said Jonathan Armitage, chief investment officer in Sydney. The moves reflect a desire to diversify the portfolio to “cope with a number of different scenarios,” amid heightened geopolitical uncertainty and stretched valuations in US stocks.
The company has also added insurance bonds and is exploring asset-backed financing, including credit card receivables, that can bolster returns while reducing correlations to other parts of the portfolio, like stocks and government bonds, he said.
The decision to boost emerging-market exposure reflects optimism over Chinese equities, which have performed strongly this year, Armitage said. In contrast to US shares, “Chinese equities as a whole were trading at very low valuations and were discounting an awful lot of bad news,” he said.
Australian Retirement Trust — Over A$330 billion
US stocks are “priced for unimaginable exceptionalism,” said Andrew Fisher, head of investment strategy in Sydney. The fund had been marginally underweight in the US market for a number of years and that’s unlikely to change, he said.
“The real story is that the multiples you’re paying for earnings growth that is unbelievably exceptional are just too high,” and “any piece of news can break that fragile confidence that they can continue to deliver earnings growth into infinity,” he said.
Fisher is focused on real assets for the coming year, but he doesn’t anticipate significant allocation changes. He will be focused on potential vulnerability of the Treasuries market following a May selloff on fiscal concerns that eventually reversed.
Aware Super — A$185 billion
“There’s more uncertainty around the political dynamics in the US,” said Damian Graham, chief investment officer in Sydney. “Where market dislocations occur, if you stay front-footed you can make good investments and that could happen again with the US and the uncertainty there.”
The money manager is reviewing its strategic asset allocation but doesn’t anticipate major changes. Aware Super finalized a property deal in London last year that reignited its appetite for office space. It’s working on a separate deal in continental Europe that it expects to finalize within months.
“We haven’t been investing in office for many years,” Graham said. “We’ve found that it’s been a good opportunity for us to invest in what I would call core assets with really attractive potential returns.”
MLC Asset Management — A$94 billion
MLC Asset remains constructive on the US but is exploring alternative allocations across asset classes in Europe, including private equity and private debt, said Daniel Farmer, chief investment officer in Melbourne. Europe offers “attractive valuations” on a relative basis including “selective and very specific” opportunities in property, he said.
The firm has identified “good quality property assets that could do with some mild repositioning,” through equity investments or by providing credit, he said.
Cbus Super — A$100 billion
“We’re mildly underweight global equities and overweight emerging-market equities,” said Leigh Gavin, chief investment officer at Cbus, a pension fund for construction industry workers. The fund remains bullish on the US despite heightened uncertainty, he said.
“The US sees itself differently in the world landscape over the next 10 years — it’s a more isolationist agenda,” Gavin said. “The range of outcomes for the US over the next decade looks much wider than this time last year.” But this will not necessarily trigger a cut in allocations, especially for stocks, where earnings per share growth boosted returns, he said.
“The US has still got some of the most innovative, profitable companies in the world and does a better job of turning GDP growth in EPS growth than most countries,” he said.
HESTA — A$94 billion
The re-basing of the US economy to focus on national security and supply chains will provide opportunities and challenges, while tariffs “can reduce growth and increase inflation,” said Sonya Sawtell-Rickson, chief investment officer in Melbourne. “Companies or assets that are exposed to global trade and predominantly imports might find that more challenging,” she said.
There’s also a “phenomenal re-plumbing of the economy” through AI, which has the potential to generate productivity gains, she said. “If that comes through, then I think the earnings growth and the results will sustain the performance” of the US stock market, she said.
While the fund isn’t diverting money away from the US, it’s being thoughtful about opportunities, Sawtell-Rickson said. HESTA is looking in the US and Europe for commercial, industrial and residential property investments, and alternatives such as self storage, she said.
Legalsuper — A$7 billion
Legalsuper, which was set up for the legal profession, is holding its position in US equities and bonds but “not adding to them,” said Andrew Lill, interim chief investment officer in Sydney. “In the US mid-cap space and credit markets, we feel like it still maintains its exceptionalism.”
The fund, which has about a quarter of its default fund invested in private markets, is less positive about the dollar, which is “reverting back to a sensible long-term norm.” That means thinking about hedges, “and probably having a slight underweight to the US dollar versus its benchmark and a slight overweight to sterling, euro and and yen.”
Legalsuper is looking in India for private-markets opportunities in its emerging-markets portfolio, Lill said.
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Published on July 8, 2025