Brighter Super’s recent mergers with Energy Super, LGIAsuper, and Suncorp Super have fundamentally transformed its investment strategy, the fund’s chief investment officer said.
Speaking to InvestorDaily’s sister brand, Super Review, Mark Rider said the fund’s recent mergers have provided an opportunity to build a more resilient portfolio that can adapt to changing economic conditions.
“It’s been three years in the making, preparing our portfolios at the moment. The first of two mergers, Energy Super with LGIAsuper, was in July 2021, and then in April 2022, Suncorp Super joined the family,” Rider said.
“Through that fairly tumultuous period, inflation picked up, interest rates have risen, and we’re now seeing inflation come tumbling down, economic growth slow, and interest rates beginning to retrace around the world.
“When I look at the fund that we have, as we’ve built those three funds together, it’s one where we’ve avoided having any big biases, particularly the equity portfolio, but elsewhere towards let’s call it factors which have been driving portfolios. Take the initial downturn during 2022, it was very concentrated in decreasing growth stocks, venture capital PE. The fund that we had built was one which had a fairly factor neutral exposure to equities.”
The mergers have also enabled a reduction in credit exposure, allowing the fund to bolster its government and investment-grade bond holdings for greater defensiveness.
Moreover, as the MySuper fund evolves, Rider noted a push towards increasing allocations in private equity and infrastructure to enhance resilience in a potentially volatile economic environment.
“I think another important consideration we’ve taken on board is interest rates. While they’re coming off, we think that those days of zero rates are behind us,” he said.
“To an extent, it’s right now that a lot of what we’ve done [with the mergers] has been coming in as we’ve integrated the portfolio and made shifts. On 31 May 2024, we rationalised via asset class to come back from 50+ options down to around 12. Now, what we’re doing is looking ahead.”
The scale of Brighter Super has also opened new doors for targeted investments, including a commitment to invest $500 million in Queensland over the next three to five years. This investment not only aims to generate returns but also supports the local communities where the majority of Brighter Super’s members reside.
Additionally, the fund is exploring opportunities in energy transition and digital infrastructure, leveraging its size to identify superior investment avenues.
With a strategic shift in asset allocation, Rider said Brighter Super is positioning itself to thrive in a diversified market while navigating the complexities of the global economic landscape.
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