Exposure to US tech stars lifts CFS super results
Colonial First State’s impressive double-digit returns for its employer super balanced fund and growth fund will strengthen claims that the group’s fortunes are turning around.
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Colonial First State has benefited from strong exposure to US tech stocks, reporting a 12.1 per cent return for its employer super balanced fund and a 14.3 per cent return for its growth fund in the financial year ended June 30.
The strong investment returns – which outstrip those of industry fund giant AustralianSuper, which reported 8.46 per cent for its balanced option and 10.2 per cent for its high growth option – will strengthen claims that the group’s fortunes are turning around.
“We are showing some good investment returns, but we are doing it in a very cost-effective way,” Colonial First State chief investment officer Jonathan Armitage said.
“The business is showing very strong momentum with investment performance, low fees, and we are starting to see some good flows into the business across the board.
“The Edge wrap platform has seen an inflow of funds of more than $1bn in 200 days.
“For a new platform it is pretty robust, but we are seeing good momentum across other distribution areas as well.
“It is very much driven by the fact that people are seeing some very strong investment performance from us across the board.”
Mr Armitage said CFS’s strong investment performance over the 12 months to June 30 had largely been driven by strong returns in global and domestic equities.
“The strength of global sharemarkets has really been the core driver of investment returns over the last 12 months,” he said.
He said CFS was also in the relatively unique position of holding no legacy unlisted assets.
“In an environment of higher interest rates, this has allowed us to deliver another year of solid returns for members,” he said.
CFS has $150bn in funds under management and more than 900,000 members.
AustralianSuper, which has $330bn in assets, has not had the same exposure to US tech stocks.
The latest results mark the second consecutive year that CFS has delivered double-digit returns for its MySuper balanced fund and growth fund members.
Mr Armitage said that CFS had a “good exposure to a lot of the stocks which have continued to perform very well.”
“While lots of people are talking about Nvidia, which was a core holding of ours, we also had Alphabet, Meta, Microsoft, which were all pretty strong performers as well,” he said.
“Domestically, the fund has benefited from some big mining stocks, as well as the Goodman group, which has benefited from what has been going on in the data centre area.”
The retail wealth management group, which was once owned by the Commonwealth Bank, is now 55 per cent-owned by US private equity giant KKR, with the CBA retaining a 45 per cent stake.
Mr Armitage said CFS had benefited from not having significant exposures to unlisted real estate assets.
“You would be very familiar with some of the challenges in that area.
“We have no overseas real estate exposure.
“There have been some real weaknesses in those areas, so avoiding some of those things has also been beneficial to returns as well.”
He said the growth fund had a higher weighting to shares and lower weightings to areas like fixed income and real estate.
Mr Armitage said he had not expected the strong returns from US tech stocks over the past year, which were driven by a new assessment of the role of artificial intelligence.
Mr Armitage said CFS was looking at expanding its investments in emerging markets in Asia such as South Korea, Taiwan and China.
He said that while economic growth had slowed in China, its sharemarket valuations were much lower than in the US.
He said CFS was also looking at increasing its exposure to private debt.
Originally published as Exposure to US tech stars lifts CFS super results
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