Biggest Australia Pension Fund Bets on Stocks as Easy Money Ends

(Bloomberg) -- Australia’s biggest pension fund has been buying stocks as the era of easy money ends.

As global interest rates normalize, the biggest beneficiaries of excess liquidity such as bonds and interest-rate sensitive investment would be “the worst affected,” Mark Delaney, chief investment officer of AustralianSuper Pty., said at the Bloomberg Invest summit in Sydney on Wednesday.

“So the key thing for us was to rotate the portfolio away from a theme of being ‘slow and low’ to ‘upward and rising,”’ he said.

“We’ve been basically buying stocks in the last 12-18 months or so, and we’ve been ‘bar-belling’ the portfolio in some ways,” Delaney said. “We’ve been selling the mid-risk part of the portfolio, which is in some extent bonds and credit, holding more cash and holding more equities.”

AustralianSuper, which manages about A$130 billion ($97 billion) in pension savings, sold most of its fixed-interest holdings early last year, Delaney said.

However, bonds may be starting to look attractive again after 10-year Treasury yields reached the highest since 2011 Tuesday, climbing to 3.09 percent.

“Now they are a percent higher, a percent plus, we’re starting to think about whether we should close that short position,” he said.

To contact the reporters on this story: Peter Vercoe in Sydney at pvercoe@bloomberg.net, Haidi Lun in Sydney at hlun1@bloomberg.net.

To contact the editor responsible for this story: Edward Johnson at ejohnson28@bloomberg.net.

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