With interest rates unlikely to drop to the levels previously seen in the years leading up to 2022, unlisted assets are less likely to achieve as much outperformance against listed assets in coming years, according to State Street Investment Management senior strategist Clive Maguchu.
Speaking at the Australian Wealth Management Summit 2025, Maguchu said the past decade and a half has been an amazing time for investments in real assets.
“That low-interest rate environment was really beneficial for assets that utilise leverage,” Maguchu aid. “Secondly, you had very low yields coming from traditional income producing assets like fixed income so that pushed a whole lot more money into real assets.”
Maguchu noted that interest rates have now risen above the levels seen during the previous 15-year period.
“We do see interest rates coming down a little bit but definitely not to the levels that we had previously,” he said. “That means it will be more of a balanced outlook between listed and unlisted assets going forward. Not necessarily a terrible thing for real assets, but not as much of a beneficial impact.”
Speaking on the same panel discussion, Capital Prudential managing director Jarrad Haynes said it was important to look at the long-term trend when looking at unlisted assets.
“I think over the next couple of years, there is a general view that rates will dip and then potentially come back up again,” Haynes said.
“When you’re looking at real assets, I think it’s important to look a little further than the immediate next few years … If you take a view of interest rates more across that [medium to long-term] and look at the 10-year bond rates, it’s pretty consistent. If you sort of take that out for 10 years and shape that around your real asset portfolio, I think it’s quite compelling to say you can match your asset allocation against that interest rate cycle.”
AustralianSuper stated recently that its high exposure to unlisted assets in FY2024–25 had partially weighed down its returns.
In an investment update, AustralianSuper investment communications manager Sam Weaner said the strong performance of listed markets in recent times meant that any fund invested primarily in listed assets had performed fairly well.
“Any funds that had a mix of listed assets and unlisted assets were a bit farther down the list. This is one of the challenges that we faced over this past year,” he said.
The fund remains committed to its strategy, however, with around a quarter of the total Australian Super portfolio currently invested in unlisted assets, both in Australia and offshore.
The Australian Retirement Trust also still considers unlisted assets attractive, with Andrew Fisher, general manager of total portfolio management and resilience, recently stating he was confident in the ability for unlisted assets to generate strong yields over coming years.
