Australia's $1.5 trln pension sector invests in debt again
SYDNEY - Australia's A$2.4 trillion pension sector grew its investments in local and foreign debt by more than A$20 billion over the past year as higher yields burnished an asset class overlooked in a country where equities traditionally rule.
"We had a very low allocation to fixed interest for much of the last two or three years and are now building that back up again as rates start to normalise," said Katie Dean, head of fixed income, currency and cash at AustralianSuper. Australian investors have historically preferred stocks to bonds, in part due to dividend friendly tax laws since the 1980s that enhance income from stocks.Australian government 10-year bond yields had dropped to around 1% in 2020 before the pandemic, from 6% in 2007. They are now above 4%.
But the spectacular rise in benchmark sovereign yields since late 2020 is luring funds back to public markets, said Sivapalan.
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