ART asset base could reach $500b by 2030

Mike Taylor

Managing Editor and Publisher

4 December 2024

Australia’s second largest industry superannuation, Australian Retirement Trust (ART), could realistically achieve an asset base of half a trillion dollars by 2030, according to research and ratings house Morningstar.

In a new ratings assessment of the big Queensland-based fund, Morningstar analyst, Sharmi Popat said ART’s multisector strategies have a strong investment team managing a repeatable and scalable process in generating return outcomes for members.

The analysis said ART’s Chief investment officer Ian Patrick has been astute at leveraging the skills and experience of ART’s investment team, fostering an inclusive culture, and complemented by broad external consultant partnerships and a stable lineup of strategically selected asset managers.

“The externalization of the public markets assets allows for a deeper focus on the firm’s internalized private and real assets capabilities, which are well resourced and continue to prove their mettle,” it said. “That said, we do note the key-person risks related to the investments’ leadership team and especially the heads of the private and real assets.”

The Morningstar analysis said ART’s investment process is well designed and pragmatically applied to achieve return objectives.

“We think that the asset-allocation process has a robust set of quantitative and qualitative inputs in formulating its views. The firm wide manager-selection framework highlights the depth of analysis, and the limited turnover is reflective of effective manager selection.

“There is clear cognizance of capacity risks with an asset base of $304 billion as of June 30, 2024. These are mitigated through the 40%-50% exposure to passive/enhanced indexation within its public markets’ allocations. The scalability of this allows ART to use its risk and fee budgets in accessing high-conviction public market managers and optimising costs in private markets with its partners,” the Morningstar analysis said.

It said the global real assets and private assets (equity and debt) books are sizeable with commensurate risks and management needs in terms of liquidity, valuation, and execution, thus requiring more extensive due diligence and a focus on quality partnerships.

“ART has invested in the teams and functions accordingly. Fees overall are higher compared with peers and are a function of the external partnerships model, though positive return outcomes continue to benefit members.

“Overall, ART has a strong investment team effectively implementing a repeatable and productive investment process, warranting our continued conviction.