Mark Hargraves, who leads AustralianSuper’s $150 billion global equity portfolio, humorously identifies jet lag as his primary concern, not market volatility. He remains unfazed by the recent surge in global bond yields, dismissing notions of a systemic problem or an immediate need to adjust the fund’s equity exposure. Hargraves maintains a sanguine outlook, even amidst an “ageing bull market” that has delivered four consecutive years of double-digit gains since October 2022. AustralianSuper is one of Australia’s largest superannuation funds, managing significant investments for its members, aiming to grow retirement savings.
Hargraves attributes his confidence to what he describes as “an absolute super cycle in profits,” largely propelled by the artificial intelligence (AI) investment boom. He explains these robust earnings have buoyed equity markets against rising bond yields, preventing euphoria by rapidly normalising valuation multiples. Roughly 40 per cent of global equities, spanning direct AI beneficiaries, challengers, and related sectors like power and infrastructure, are estimated to be correlated to AI investment. This dependency means the future trajectory of the AI earnings boom is paramount.
While constructive on AI’s long-term economic impact, Hargraves acknowledges sector-specific challenges. He points to the notoriously cyclical nature of chip and memory industries, where recent stunning growth may not endure. Hyperscalers like Amazon are showing returns on AI investments, but scrutiny persists. Large language model giants face intensifying competition from open-source models. AustralianSuper’s international shares option returned 14.5 per cent last financial year, broadly in line with the MSCI World. Hargraves, a strong advocate for active management despite recent industry challenges, believes in growing AI adoption, though expects potential “speed bumps” along the journey.
