Pension fund UniSuper looks to Australian miners for the next leg of returns
SYDNEY - Australian pension fund UniSuper is looking to the local resources sector for its next spurt of growth and holding its allocation to US tech steady after the red-hot sector helped the fund to a bumper year.
Chief Investment Officer John Pearce said the Chinese economy, plagued by the slow-motion implosion of its property sector, was showing signs of reaching a bottom, which would help the A$135-billion fund's bets on Australian mining.
"We're holding tight on our resources position even though it hurt us this year," he said.
"Our feeling is China is showing signs of bottoming and if China can come out of the funk it's in, we could see a really positive impact on resources."
Changing sentiment around China should help boost the fortunes of Australia's largest miner BHP, which Pearce says is undervalued. The miner's decision to drop its pursuit of Anglo-American in May signalled how disciplined it would be with acquisitions, he added.
Overweight positions in Indian, Japanese and US technology stocks helped UniSuper return 9.2% in its primary portfolio for the year to 30 June, according to preliminary results. A separate portfolio with more equity exposure returned 11.8%.
A survey of similar funds by SuperRatings found the median returns at 8.8% and 10.5%, respectively.
While American tech is expensive today, it's not so expensive the fund would consider cutting any of its position, Pearce said.
"You remember when Apple hit $1 trillion and people said it was overvalued and then it hits $2-trillion and oh its overvalued and then it hits $3-trillion," he said.
"It's all good saying something is overvalued and then you sell and take profit and before you know it you've missed the next leg up. We're holding because we believe the secular story."
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