One on one with UniSuper: finding domestic opportunities

Super Review’s one-on-one series aims to spotlight key investment insights from the superannuation sector.

This week, Penny Heard, head of Australian equities, at UniSuper, explains the fund’s approach to deploying capital in the domestic market, including making the most of the AI trend.

What are some of the opportunities you're finding in the Australian listed market? 

Our investment strategy centres on identifying long-term, enduring trends that can generate sustainable cash flows and returns. One trend that has been particularly successful and worth a call out is the rapid growth in demand for data centres. While AI has been a focal point for the ‘Magnificent Seven’ technology stocks in the US, investing in our local champions like NextDC and Goodman Group have been a strong contributor to investment performance.

Are there any significant changes or adjustments to your investment strategy that you plan to implement for the next year?

Managing around 80 per cent of our Australian Equities exposure internally provides the flexibility to act quickly and at scale to take advantage of market dislocations.

Logical and incremental improvement is a core pillar of our investment strategy and we do not expect significant changes to this approach. AI is an interesting opportunity and we are continuously exploring how to integrate it into our investment process to enhance decision-making and efficiency.

As markets brace for volatility, interest rate cuts, and moderating inflation, how is the fund preparing portfolios for these shifts?

While we manage our portfolios with a long-term perspective, we also consider factors that influence our market outlook which may lead to tactical adjustments. For instance, as the market anticipates and, hopefully for mortgage holders, experiences rate cuts, our exposure to rate-sensitive stocks like Transurban is well positioned to benefit.

What initiatives are you pursuing to enhance member outcomes and ensure that your fund remains competitive?

In an unpredictable market, maintaining a disciplined approach to costs and keeping fees low is crucial. Our commitment to keeping fees low translates into better outcomes for our members. We continuously strive to uphold this competitive position.

Managing over 70 per cent of our funds in-house, not only helps us control costs but also provides the flexibility to customize strategies to meet our members’ needs. A prime example is our Australian Dividend Income option, which focuses on high-yielding shares and has become particularly popular among members in their pension phase.

How does the fund's younger member base, compared to other funds, inform its investment strategy?

We take pride in shaping the retirement outcomes for all our members, ensuring they can invest with choice and confidence. By understanding our members’ needs, we tailor our investment options to meet different risk profiles and time horizons, all while maintaining low fees.

We recognize that some of our younger members are particularly engaged with ESG issues. We are proud to offer three sustainable and environmental-branded options, providing our members with real choices for their super investments. These options have seen strong inflows, with funds under management (FUM) reaching approximately $16.8 billion as of June 30, 2024.