Australian superannuation funds have huge portions of their investments in equities, and Howard Marks, the chairman of Oaktree Capital, has warned it may not be such a great idea.
Speaking to the Australian Financial Review while in Sydney to visit super fund clients, the hedge fund boss said: “The mere fact an aggressive strategy wins in a winning period doesn’t prove it is the right strategy for all periods.”
“That’s something you have to think about.
The OECD says around half of Australia’s pension fund investments are in equities, with 10 per cent in less-risky fixed income.
Oaktree capital, which manages $86 billion, is one of the funds that was involved in the battle for Nine Entertainment in 2012. Along with Apollo Global Management it still holds a 36 per cent stake in the broadcaster.
As the Fin’s report points out, it rose to prominence by investing in distressed debt.
Marks, who is well known on Wall Street for his investment notes, told the Fin the rise of shares “can’t go on forever, and some day there is a day of reckoning.
“That’s why we have crises – they serve to remind people that risk awareness and risk limitation are important virtues.
“If the tide hasn’t gone out for many years, people may not understand the need for risk control and may engage in risky behaviour – which will bite them when a correction occurs.”
There’s more here.
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