AustralianSuper’s newly appointed chief investment officer, Shaun Manuell, faces a significant challenge in turning around the performance of the fund’s private asset portfolio, which has struggled despite strong results in its domestic equities segment. The $430 billion superannuation fund, which manages the retirement savings of approximately one in seven Australian workers, boasts a $100 billion Australian equities portfolio that has outperformed the S&P/ASX 300 index by an estimated 2.6 percentage points under Manuell’s leadership.
However, the fund’s roughly $70 billion allocation to real assets—including property and infrastructure—has repeatedly underperformed, dragging down overall returns. Industry insiders estimate that the real asset portfolio has returned about 5 percentage points per year below benchmark levels over the past five years. This underperformance is notable as real assets are typically considered a defensive component of the portfolio, designed to provide stable income rather than rapid capital gains.
Several high-profile investment setbacks have contributed to these losses. European property holdings, investments in data centers, and North American renewable energy assets have required substantial write-downs. One significant asset contributing to the lagging returns is a $2.5 billion stake in Vantage EMEA, a European data center venture that has suffered an unexpected decline despite the sector’s broader growth amid the AI boom. This contrasts sharply with the performance of similar investments made by other large Australian funds, such as the Future Fund’s commitment to CDC Data Centres, which has generated substantial returns.
Another problematic investment came through a co-investment with Vista Equity Partners, a leading software investor, in education technology firm Pluralsight and an extended private credit position. This $1.1 billion investment ultimately collapsed, resulting in further losses. Co-investments like these are intended to reduce fees by partnering directly with specialist managers but can carry risks if the assets selected underperform.
The fund’s offshore property exposure has also weighed heavily on performance. Former CIO Mark Delaney openly criticized earlier strategy choices, including a concentration on shopping centers over industrial properties and a failing $1.3 billion investment in London’s Kings Cross precinct.
These investment challenges have coincided with internal difficulties, as poor results have led to turnover among senior staff responsible for the fund’s private assets. A recent staff survey highlighted cultural concerns: only 38 percent of employees felt able to express opinions openly without fear of retaliation, and just 36 percent believed there was an honest two-way dialogue within the team.
Manuell, who assumed the chief investment officer role in July, has identified fixing the real assets portfolio as his top priority. He attributes much of the underperformance to the fund losing its “home-ground advantage” when expanding aggressively into international markets, where it lacked the local expertise that benefited its domestic investments. Moving forward, AustralianSuper plans to depend more on partnerships with established global investment firms for offshore assets rather than pursuing direct investments.
The fund has yet to appoint a new head for its mid-risk investment team following a departure more than a year ago, a delay partly attributed to the ongoing leadership transition and contributing to staff uncertainty. Manuell has emphasized the importance of fostering a strong culture to improve investment outcomes and is committed to addressing both performance and workplace challenges as he seeks to restore value to the fund’s private asset portfolio.