AustralianSuper Cuts Equity Exposure Amid AI Valuation Concerns
AustralianSuper, the A$400bn pension giant, is reducing its exposure to public equities as valuations stretch beyond historical norms. John Normand, the fund's investment strategy head, cites excessive leverage in AI financing and frenetic fundraising activity as key concerns. The MOVE coincides with the Nasdaq Composite's 19% year-to-date gain, following two years of outsized returns.
Tech valuations now appear stretched by traditional metrics. Nvidia trades at 43 times earnings after doubling from its April low, while Alphabet commands a 30x P/E ratio following a 60% surge. Normand warns the AI cycle is entering late-stage froth just as monetary policy tightens—a toxic cocktail for equity markets.
The concentration risk in major indices compounds these worries. The so-called Magnificent Seven tech stocks alone account for roughly 25% of the MSCI World Index, creating unprecedented market fragility beneath the surface.
