‘Don’t bet against America’: Cbus’ top stockpicker keeps faith

The new head of the $100bn construction-aligned industry fund major cautions there will be heightened market volatility under Donald Trump, but investors should aim long.

Cbus’ new chief investment officer Leigh Gavin is targeting growth to $150bn by the end of the decade. Picture: Aaron Francis

Despite a major cooling toward the US markets under Donald Trump, the new investment boss of one of the nation’s biggest super funds is still a big believer in the American economy, and intends to keep deploying cash there.

Leigh Gavin has been named as the new chief investment officer of the $100bn construction industry aligned-Cbus Super, and while the near term outlook for the US will be marked by a period of more volatility, the long-term trends will continue to deliver for members.

“I think you’d write the US off at your peril,” Gavin tells The Australian. “I remember coming out of the GFC, people thought the American story was dead. It’s still an enormously entrepreneurial country full of very smart people, very good companies, and there’s probably no other country that turns GDP growth into EPS growth better than the US”.

Stock markets advanced on Tuesday following news that US President Donald Trump plans to spare automakers from some of his wide-ranging tariffs, boosting hopes of a less combative approach to his trade war. Picture: Angela Weiss/AFP

In a wide-ranging interview, Gavin outlines why private markets are increasingly important for investing and sees the bottom on commercial property. He says ESG-investing still counts but is evolving, and explains why the ASX should have gone harder on James Hardie.

Gavin steps into the role from deputy chief investment officer of the fund, he takes charge from long-serving investment boss Brett Chatfield who has taken up an opportunity outside the fund.

Cbus chief executive Kristian Fok has outlined a target for the fund to hit a target of $150bn by the end of the decade. There is also a plan for around half of the funds to be managed in-house, up from around a third currently.

Even so, at these levels the fund is sitting in the investment “sweet spot,” Gavin says.

Cbus is the nation’s sixth-biggest industry fund, still relatively dwarfed by mega-funds including the $360bn AustralianSuper and the $310bn Australian Retirement Trust.

“We genuinely believe that at $100bn, we’re big enough to do almost anything we want internally, but we’re still small enough to do things externally. We can invest in every asset class, and we’re not capped out in any particular asset class”.

The near-term outlook for US shares under Trump will be marked by heightened volatility, and the swings will move in both directions. While Wall Street crashed in the days following Trump’s ‘Liberation Day’ tariff announcement the S&P 500 falling some 15 per cent, but markets are now around 2 per cent below their starting point.

“It feels rather bizarre that things fell so quickly and have rebounded so quickly back. But to be honest, if the first 100 days are any indication of what we might have in store in the next three and three-quarter years, I think that this sort of volatility is here to stay with us for some time”.

“Markets will wax and wane between believing that the Trump administration can put the genie back in the bottle, versus the secular challenges of deglobalisation, which are not going away”.

President Donald Trump marked his first 100 days at Macomb County Community College Sports Expo Center in Warren, Michigan. Picture: Alex Brandon/AP

Private markets

Gavin said private markets investment including infrastructure, private credit and commercial property really showed its resilience while shares were crashing.

Around 33 per cent of shares in private markets and 50 per cent in equities and the rest in cash and fixed income.

While Cbus wasn’t getting the upside when Wall Street was returning 25 per cent in back to back years, private market investments were delivering consistent positive returns during the sharp sell off.

Gavin says Cbus’s MySuper growth option has so far delivered 4.5 per cent in the financial year to date – even in the face of the heavy Wall Street sell-off.

“We still believe a diversified model with diversified sources of growth, assets, rather than just all our eggs in one basket being equities, comes into its own in years like this, and has stood the test of time over the last 40 years.”