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AustralianSuper returns 12.4% in latest fiscal year as in-house assets rise

AustralianSuper reported a 12.4% return for its balanced default option — where roughly 90% of the Melbourne-based superannuation fund's 2.2 million members invest their retirement savings — for its latest fiscal year ended June 30.

That gain lifted the value of the fund's investment portfolio to A$121.2 billion ($92.9 billion), up 21% from the year before, said Stephen McMahon, spokesman, in a telephone interview.

Mark Delaney, the fund's deputy chief executive and chief investment officer, in a news release, attributed the resumption of double-digit gains — after a 4.5% return for the prior fiscal year — to a pickup in the global economy, most notably in China and the U.S.

Prior to the previous fiscal-year return, the fund had enjoyed returns of 10.9%, 13.9% and 15.6% the previous three years.

Mr. Delaney said AustralianSuper's moves to invest a growing portion of its portfolio in-house helped drive the fund's solid returns.

The roughly A$26 billion in Australian equities, overseas equities, property and infrastructure assets managed in-house at the close of the latest fiscal year came to about 22% of AustralianSuper's total assets. That's up from A$18 billion, or 18% of the portfolio, at the close of the prior fiscal year, said Mr. McMahon.

Internal and external managers look after similar investments in those asset classes, and a comparison of investment results for the latest fiscal year shows the fund's internal team delivering A$100 million more in value added than its external managers, said Mr. McMahon.

Mr. Delaney said the buildup in internal management allows AustralianSuper to be more agile in investing its assets. The growth of in-house assets will continue, he said.

Over the past 12 months, the biggest asset allocation shift in the portfolio was a more than doubling of the fund's cash holdings to 8.8% from 3.8% the year before.

A 2.8 percentage-point drop in the fund's international equities weighting, to 29.7% of the portfolio, more than offset a 1.8 percentage point rise in its Australian equities weighting to 27.1%.