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Savings & Retirement

$107 Billion Aussie Pension Fund Eyes Europe, U.S. Expansion

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Aware Super will grow in coming years to be able to manage up to A$300 billion ($230 billion), a drive that could see Australia’s second-largest pension fund open offices in Europe and the U.S. in pursuit of more investments overseas.

The A$140 billion fund could double its staff across a range of roles from investments to tax and compliance, said Chief Investment Officer Damian Graham. The firm is trying to lower its cash pile by buying property and infrastructure assets, he said on a Bloomberg Inside Track webinar on Monday.

“We want to be prepared so that we’ve got the capacity and capabilities internally to be able to manage 200 or 300 billion dollars, and that does suggest we will need to be sourcing more of our investments around the world,” Graham said. “We would imagine it’s a European office and a U.S. office in the next few years,” subject to support from the firm’s board, he said.

The plans come as custodians managing Australia’s A$2.9 trillion in pension savings shift more money offshore, with some funds doubling in size every five years. AustralianSuper, the nation’s largest pension fund, is opening an office in New York and expanded its presence in London as it expects about two thirds of its portfolio to be invested outside Australia.

Cash to Deploy

Aware Super is holding more cash then its target level

Source: Aware Super

Note: Represents actual and strategic asset allocation for default investment option

Graham wants to invest “a few billion dollars” into property and so-called digital infrastructure rather than stocks this year in a bid to reduce its cash load. The fund prefers building assets like condos in Amsterdam and Los Angeles, rather than buying established businesses that are expensive, he said.

See the TOPLIVE Transcript for more from Bloomberg’s Inside Track webinar

Still, deals will focus on developed countries rather than ones in emerging markets, Graham said. While the fund has looked at opportunities in India and has invested directly in Chinese stocks, the “challenging” dynamics around being minority shareholders can make it difficult to make money, he said.

“We’re sitting and biding our time,” Graham said.

(Updates with investment details from fifth paragraph)