The Australian Retirement Trust, a pension fund valued at AUD260bn ($174bn), plans to increase its private credit allocation over the next year, targeting opportunities in Europe and North America.
In an interview with Bloomberg, Andrew Fisher, Head of Investment Strategy at ART, Australia’s second-largest pension fund, said that it aimed to raise its position from just under 1.5% to 2.5% within the next six to twelve months, though he did not specify the target value of the exposure.
To build its exposure to the asset class, ART plans to blend external managers with its internal team.
The firm is adopting a “disciplined” approach to building its allocation, directing funds towards the lower-risk, unlisted segment of the credit market. Fisher said: ““There’s a lot of money chasing the space.
“We are competing with banks, which is why there’s a tendency to be offshore, because the banks have a pretty dominant position here.”
He added that there were opportunities in global credit for small-to-medium size businesses.
Other leading funds in Australia’s rapidly expanding AUD3.7tn pension industry are also showing an increased interest in private credit. Cbus, which manages AUD90bn, plans to triple its global allocation to this asset class, while Hostplus, with AUD104bn, is seeking to expand its already substantial private credit holdings. Last December, the country’s largest pension fund AustralianSuper increased its partnership with private credit specialist Churchill Asset Management to $1.5bn.
Last month, ART opened an office in London, joining AustralianSuper and Aware Super’s expansion into the UK. Fisher added that ART, which already owns a stake in Heathrow Airport, is looking to expand its infrastructure and real estate portfolio in the region.
