Pension-Fund Giant Warns Policy Mistake Risk Is Now Elevated
MLC Ltd., one of Australia’s largest pension funds, is pinning its hopes on private-equity investments to lift returns amid an outlook for increasingly volatile markets and an elevated risk of policy errors as the global economic cycle ages.
There is now a higher risk of policy mistakes coming from governments or central banks and the sustainability of corporate profit margins near all-time highs is under threat, according to Jonathan Armitage, the firm’s chief investment officer in Sydney, where he oversees about A$81 billion ($57 billion) in assets.
“In areas like equities, we expect the amplitude of returns to be quite volatile,” he told a conference in Sydney Wednesday. Private equity “will play a very strong and enduring role in our wider multi-asset portfolios and ultimately help produce” returns, Armitage said. Even as the Federal Reserve signals a pause to tight
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