Aware Super eyes infrastructure after tech drives double-digit MySuper returns

The $160bn super giant delivered double-digit returns last year for about half its 1.1m members, thanks to a technology-fuelled rally in equities. Now, other opportunities are on the horizon.

The $160bn super giant Aware Super delivered double-digit returns in 2023 for about half its 1.1m members, who are in its default MySuper option, thanks to a tech-fuelled rally that drove gains in international equities.

But chief investment officer Damian Graham says infrastructure investments is where the fund sees future investment opportunities.

“Global equities was the best-performing asset class, with technology a standout sector,” Mr Graham said. “Infrastructure was also a strong performer – and it’s an area where we see plenty of opportunity for further investment in future.”

Aware’s high growth option, the default MySuper option for members aged 55 and under, returned 12.3 per cent in 2023, up from a 7.5 per cent loss the previous year when rapidly increasing interest rates pushed asset prices down.

More than 550,000 out of its 1.1m members are invested in the option, which has a target return of the Consumer Price Index plus 4 percentage points, the fund said in a statement.

Over the past decade, the option has delivered 8.4 per cent. “We’re delighted to have delivered such a strong return for them,” Mr Graham said.

He said the portfolio was positioned to capitalise on “significant” global trends “including ongoing growth in the digital economy, the energy transition and ageing demographics,” he said.

“This continues to help us in delivering strong long-term returns for our members.“

Aware Super (formerly First State Super) merged with VicSuper, the default fund for public services employees in Victoria, in 2020, to create one of the largest industry super funds with $160 billion in funds under management.

“Our strong performance in 2023 follows a year of broadly positive economic developments. Labour markets proved remarkably resilient to rising interest rates, and inflation trended lower later in the year after initially proving stubborn,” Mr Graham said.

He warned, however, the global economic outlook remained uncertain and he expects to see stubbornly high inflation.

“We do expect to see a slowdown in economic growth from the longer-term effects of higher interest rates, although we’re certainly not expecting a deep recession.”

“Inflationary pressures are subsiding, but the period of low interest rates and inflation is over for now all the same. Different sectors in the economy continue to adjust to these new settings,” he said.

Aware had a diversified portfolio that included stocks, bonds but also alternative assets that were more resilient to higher-inflation scenarios, he added.

The fund this year launched its first international office, in London, and vowed to direct a $10 billion investment commitment in the UK and Europe through that office in the next few years.

Among Aware Super’s other investment options for members saving for retirement, the high growth indexed option returned 16.4 per cent for the 12 months to December 31st, high growth socially conscious returned 12.8 per cent, and the balanced option returned 11 per cent, it said.

Its most popular investment option for members in the pension phase, its retirement income conservative balanced option, returned 8.7 per cent during 2023.