The $160 billion super fund has a target of some $250 billion in assets under management by 2025–26 and plans to hit this target through a combination of factors.
Namely, the fund opened a London office mid-2023, which focuses on direct investment in real estate, infrastructure, and private equity, with an emphasis on the energy transition sector, affordable housing, innovation, life sciences, technology, and the digital infrastructure sector.
Speaking to InvestorDaily, Michael Winchester, Aware Super’s head of investment strategy, said the fund plans to grow its headcount in London by 30–40 staff within the next few years, to help it reach its asset target.
Moreover, the fund intends to modestly lift its exposure to unlisted assets this year, and indeed over the next few years, with a focus on infrastructure, property, private equity, and credit.
“We, and other large super funds, have long moved on from the simple 60:40 construct of equities and bonds, and embraced alternative assets that are much more resilient to higher-inflation scenarios and play an important role in delivering strong long-term returns for our members,” Mr Winchester observed.
Aware Super currently holds multiple private equity allocations including climate agritech company Rumin8, telehealth platform Halodoc, technology venture capital fund Blackbird Ventures, and healthcare fund Global Health Opportunities Capital.
Mr Winchester observed: “In recent years, we’ve been gradually increasing our exposure to these sectors, focusing on assets we believe are well-placed to outperform longer term. We see more opportunity still in these sectors.”
Reflecting on 2023, Mr Winchester revealed that Aware Super performed exceptionally well, delivering double-digit returns for the calendar year, with the fund’s High Growth option hitting 12.3 per cent over the 12 months to 31 December, and 8.4 per cent per annum on average over 10 years.
Similarly, the fund’s Retirement Income Conservative Balanced option delivered 8.7 per cent in CY2023, and 6.5 per cent per annum over 10 years.
“There were some positive surprises for the economy last year with labour markets showing remarkable resilience in the face of rising interest rates, while inflation trended lower after initially proving stubborn,” Mr Winchester said.
“We believe central banks have broadly completed their tightening cycles, so interest rates are now likely to be steady for a time before starting to retreat.”
The fund is not expecting a deep recession in 2024, he said, rather a slowdown in economic growth from the lagged effects of higher interest rates.
“While inflationary pressure has eased, the period of low interest rates and inflation is over for now and we’ll need to see how different sectors in the economy adjust to this new regime,” Mr Winchester added.
Looking at its portfolio for the new year, he outlined it was positioned to reflect significant trends that will drive long-term returns for its members, including growth in the digital economy, decarbonisation, and changing demographics.
“Within listed equities, the energy transition, artificial intelligence and ageing demographics are among the key themes that we expect will create opportunities for active management to add further value,” Mr Winchester shared.
“We’re overweight the healthcare sector and underweight energy as it stands, which is reflective of where our active managers are finding some bottom-up opportunities.”