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One of Australia’s largest pension funds is ahead of schedule with its plans to invest billions in the UK and Europe, citing attractive investment opportunities, while the US outlook has become more uncertain.
Deanne Stewart, chief executive of Aware Super, which manages A$190bn ($124bn) for more than 1.1mn savers, said she saw a “really significant opportunity for Europe and the UK”, and while there were trade challenges with the US “if you have a look at what’s going on with capital flows . . . you can see where the marginal dollar has been flowing”.
Aware Super opened its first overseas office in London in November 2023 and announced it would invest A$10bn (£5.25bn) in the UK and Europe over a five-year period.
Eighteen months later, it has already met its interim two-year target of having A$3.5bn invested, thanks to partnerships with UK energy supplier Octopus Energy, fibre platform euNetworks and a big bet on central London offices.
Damian Graham, Aware Super’s chief investment officer, said the investment pipeline in the UK and Europe was strong, particularly in businesses linked to the energy transition. The region provides “a more stable environment for longer term decisions” in this area than the US, he added, as decarbonisation has become highly politicised there.
Aware Super’s bet on European assets comes as some big investors have started to shift away from US markets in response to Donald Trump’s erratic trade policies and worries about the country’s increasing debt pile. The US dollar fell to a three-year low against a basket of currencies this week.
Trump’s landmark “big, beautiful” budget bill has created further uncertainty, with proposals for new taxes targeting foreign investors in the US. Graham said he was “very very focused on” understanding the potential impact on the fund, which could amount to tens of millions of dollars.
He said that while the US would remain a “large and important market” for Aware Super and other major pension funds, “there’s a question mark over how much goes there into the medium and long term . . . I do think there will be a rebalancing”.
Aware Super’s optimism about European assets comes as private capital group Blackstone prepares to significantly increase its investments across the region, betting that economic reforms will help revive growth.
The group with $1.2tn in assets said this week it would aim to invest “at least $500bn” in Europe in the coming decade, highlighting Germany’s decision to relax its borrowing rules to finance infrastructure and defence investment as a positive change.
Other pension funds have turned to Europe in recent months.
“We are starting to see a lot of interesting things in European private equity — the opportunities there are growing,” said Aaron Bennett, chief investment officer of Canada’s University Pension Plan, adding that governments were starting to do “some difficult but necessary things to improve their long-term economic competitiveness”.
Stewart concluded that when Aware Super looks at the UK and Europe and thinks about “the big global themes that we want to invest in . . . we feel really comfortable with how we are investing here”.
https://www.ft.com/content/ee20de60-4787-4a93-afc6-3e2caecdb81a
