When most investors are running from market volatility, Australia’s No. 2 super fund is doing the opposite. The Australian Retirement Trust is buying Japanese and European stocks and U.K. bonds, viewing the selloff as a chance to shop.
Key Highlights
- Australia’s No. 2 super fund ART is buying Japanese and European stocks plus UK bonds when markets are depressed.
- ART trades almost every day, well above its former once-a-week clip.
- The fund has reduced its exposure to US dollars, shifting towards the euro, yen and pound.
- Australian funds are reconsidering their offshore positions and CBUS Super has also cut its foreign currency holdings.
ART Is Purchasing Japanese and European Stocks
The Australian Retirement Trust has been buying Japanese and European shares and UK government bonds, two of the most sold-off assets in the world today, in its efforts to capitalise on distortions created by the Iran war. Senior portfolio manager Jimmy Louca said the fund is trading nearly every day, rather than at its normal pace of once a week.
“Whereas in something like this, we’re trading nearly every day and this drawdown is still early and still running,” Louca said. “If the decline accelerates we will accelerate our activity to take advantage of cheaper assets.” The fund employs an active strategy at the asset level, which lets it rapidly buy and sell across different markets using an in-house trading desk, providing flexibility to move fast when prices drop.
What ART Purchases, and Why It Does So
ART’s idea is based on monitoring the shifts in the relative valuations of assets and countries. When prices in one market drop relative to another, the fund takes advantage of what it calls that gap when determining where to place cash. Right now, that means Japanese equities, European shares and UK bonds, all hard hit by uncertainty around the Middle East conflict and rising energy prices globally.
How They’re Playing it Differently at Other Australian Super Funds
Not every fund is going to buy the dip. Colonial First State, which oversees A$179 billion, is taking a more defensive tack, shifting towards floating-rate debt and inflation-protected bonds to contend with the perfect storm of higher inflation alongside slower global growth. Jonathan Armitage, the chief investment officer at CFS, said that the surge in oil prices sparked by the war in Iran could subtract as much as half a percentage point from US growth in 2026.
CBUS Super, which has A$110 billion in assets, has trimmed its total foreign currency exposure as the Australian dollar gains. ART itself has reduced its holdings in US dollars and is moving more of its currency exposure into the euro, yen and pound, a direct reaction to the decline in the value of the US dollar against other major currencies since the conflict started.
What This Means for Ordinary Australians With Super
The choices these funds make in times of high market volatility directly affect the retirement savings of millions of Australians. ART alone oversees the superannuation of about 2.3 million members, every trade it executes is underwritten by Australian workers’ contributions. The fund’s active management style during this period is proof that today’s prices are just a temporary blip rather than the beginning of a longer decline.
Whether that bet pays off will depend in large part on how the conflict in the Middle East evolves. And if markets rebound once things calm, members in funds such as ART that purchased during the selloff could see solid returns.
FAQs
- What is ART buying?
Japanese stocks, European equities and British government debt, all of which have plunged sharply in the current market turmoil.
- Is this dangerous for super members?
All investments involve risk. ART’s strategy is to purchase assets it thinks are being mispriced versus their ultimate value, but what happens next will depend on how the markets move from here.
- What is the Colonial First State doing instead?
Shifting toward floating-rate debt and inflation-linked bonds as a hedge against the combination of rising inflation and slower global growth.
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