13 February 2025
This month, we caught up with the Investment Team at AustralianSuper to get their 2024 reflection, view of the economy and the approach to researching assets in the portfolio.
2024 was a year that continued the trend of strong performance for share markets, especially in international markets. A resilient US economy, strong corporate earnings and demand for AI applications drove markets higher. We also saw that international equity market concentration is at its highest level since the early 2000s, driven by the growth of AI and automation. This has been a significant tailwind for the Magnificent Seven innovators that have dominated the US stock market and continued to drive performance throughout 2024.
The ongoing science of scrutinising economic data was enlivened by the mixed signals from consumer, productivity, employment and business trends in Australia and in international regions. We also saw a divergence of monetary policies from central banks around the world, with some central banks easing while others are remaining hawkish.
Looking ahead, the global economy is likely to remain in expansionary territory through 2025, albeit with a considerable degree of cross-country dispersion. We are cautiously constructive for this year’s investment and economic outlook when balancing the potential outcomes for economic growth, inflation, central bank policies and asset valuations.
The US political landscape has some significant implications for macroeconomic outcomes both in the US and abroad for regulatory policy, international cooperation and the geopolitical landscape. There may be impacts to corporate tax rates, tariffs, fiscal spending, regulation and foreign trade. These factors reinforce our medium-term view towards more macroeconomic volatility and potentially higher inflation.
When analysing an asset, the investment team focuses on a business perspective and building a story around what the asset does and what drives value for the asset. This enables the team to look through the day-to-day noise of the media cycle or market movements and focus on what aspects will enable the asset to build value over time. The investment team often considers what an asset will be worth in five years based on factors such as competitive advantages, balance sheet positioning and pricing power. We also seek to create value through the ownership phase of an asset by communicating and engaging with the business in a way that is consistent with maximising long-term value.
Sponsored by AustralianSuper Pty Ltd, ABN 94 006 457 987, AFSL 233788, Trustee of AustralianSuper ABN 65 714 394 898.
Any general advice provided in this article is provided under the AFSL held by AustralianSuper, it does not take into account your personal objectives, financial situation or needs. Before making a decision, consider if the information is right for you and refer to the relevant Product Disclosure Statement, available at australiansuper.com/PDS or by calling 1300 300 273. A Target Market Determination (TMD) is a document that outlines the target market a product has been designed for. Find the TMDs at australiansuper.com/TMD.
