Australia's $71 billion pension fund snaps up global stocks in Iran war rout

By Scott Murdoch

SYDNEY, April 15 (Reuters) - Australia’s A$100 billion ($70.81 billion) pension fund HESTA has been buying bruised global equities, notably technology and artificial intelligence (AI) names, capitalising on market dislocations triggered by the Iran war, a senior executive said.

The move highlights how Australia’s vast A$4.5 trillion ($3.2 trillion) pension funds, known locally as superannuation, are using bouts of global volatility to deploy fresh capital, even as fund managers warn members against panic shifts into cash that has delivered lower returns during past bouts of upheaval.

A Super Members Council study found recently an Australian worker with a A$100,000 pension balance who switched to cash during the COVID-19 pandemic would have been about A$50,000 worse off over five years.

Jeff Brunton, HESTA’s deputy chief investment officer, said the fund entered the year “underweight” equities but had added to its holdings recently as the Iran War shook market confidence.

“As markets began falling and coming back closer to our view of fair value, we began to buy back our underweight position in stocks,” Brunton told Reuters.

HESTA owned about A$42 billion worth of Australian and international equities as at early February in its balanced fund, the most common investment option, according to the fund’s most recently available figures.

“We’ve been buying the broader market and the tech sector is a dominant part of the global stock market with the weight of the ‘Mag 7’ so when we deploy more, we’re getting more exposure to those companies,” Brunton said.

The “Magnificent seven” refers to Apple (AAPL.O) , Microsoft (MSFT.O) , Alphabet (GOOGL.O) , Amazon (AMZN.O) , Nvidia (NVDA.O) , Meta (META.O) and Tesla (TSLA.O) . HESTA owned about $3.3 billion worth of those stocks already in its balanced growth fund as of the end of December, according to its filings.

There are significant opportunities for HESTA and other super funds to lean in and shape how AI is responsibly and sustainably integrated into investment portfolios and adopted by the companies they invest in over the coming years, he said. ($1 = 1.4122 Australian dollars)