MLC currently manages an asset base of approximately $150 billion. Despite the local sharemarket delivering gains of over 10% so far this year, the super fund remains cautious. The main concern is that many Australian companies lack the strong long-term themes and consistent growth stories found among global leaders, particularly in the tech-driven US market.
MLC has stated that it is not completely moving away from Australian equities, but it has become neutral on the sector rather than optimistic. Other major players in the superannuation industry are expressing similar concerns. Some have described domestic shares as expensive and have reduced holdings in large Australian banks. In anticipation of market volatility, MLC is also using derivatives to help limit potential future losses while still maintaining equity exposure.
This move reflects a broader change in sentiment. Investments focused on global growth, especially in emerging technology and offshore markets, now appear more appealing than traditional Australian stocks which often depend on commodity cycles. If other large funds adopt similar strategies, the ASX could face challenges despite its recent strong performance.
