Troy Rieck, the chief investment officer of LGIAsuper, says serendipity favored the Brisbane-based fund as the coronavirus crisis unfolded in recent months.
Mr. Rieck took the helm of the A$13 billion ($8.3 billion) super fund's investment operations last September and in anticipation of repositioning the portfolio had built up a 5% weighting in cash by the start of February — more than the fund had ever held, he said.
LGIAsuper's CEO, Kate Farrar, in a separate interview, said Mr. Rieck's "well thought through" focus on liquidity extended to switching off the dividend reinvestment plan for the default option's 25% allocation to real estate and infrastructure.
When Mr. Rieck joined, more than half of the portfolio could be liquidated within 30 days but that grew to roughly 70% of the portfolio by the time the market began collapsing late in February, Ms. Farrar said.
Mr. Rieck said he also added foreign currency exposure for downside protection, in light of the Australian dollar's habit of strengthening in bull markets and weakening in bear markets. The move was in part out of concern that low yields would diminish the "traditional defensiveness" of government bonds, he said.
All in all, it was a fortunate case of "our long-term plans (working) out really well for a short-term crisis," Mr. Rieck said.
Mr. Rieck said he had been moving to reposition the portfolio because — even though LGIAsuper had done very well during the tenure of his predecessor, David Todd — the environment had changed considerably from the one Mr. Todd inherited 15 years earlier.
For one thing, in 2017, LGIAsuper became a "public offer" fund, rather than one which local government employees in the state of Queensland were compelled to join — a new environment that demanded ever more attention be paid to what competing super funds were doing.
Meanwhile, allocation decisions made five years ago that have "paid off in spades" for the fund, such as shifting assets to U.S. equities from Australian equities, simply can't be expected to deliver similar results going forward, Mr. Rieck said.
U.S. quality growth stocks in sectors such as technology and health care have "crushed everything else" for so long, it's time to begin, gradually, bringing some of that money back to Australia, he said.
The typical value strategy now is heavily overweight financial stocks, which investors continue to bypass with their focus on U.S. tech stocks and health care stocks, Mr. Rieck said.
While that secular trend in technology should continue, "I also think it can be cyclically overpriced," Mr. Rieck said, adding that he's now "happy to go to places where expectations are very low."