Investment chiefs behind WA's biggest superannuation fund GESB have warned the sharemarket could be getting ahead of corporate earnings, as the leading S&P-ASX 200 index powers towards the crucial 5000 level.
However, GESB chief executive Howard Rosario and acting head of investments Bill Dwyer said while the global debt binge from 2008 had yet to fully unwind, longer-term conditions looked positive.
In particular, they declared the United States' cheap shale gas revolution would spur that economy and make it a prime long-term financial bet.
In a wide-ranging interview with _WestBusiness _on their outlook for this year, Mr Dwyer said the US was still not out of the political woods on negotiations to lift its Government's debt ceiling, but it was looking healthier than depressed Europe.
"On the US we are actually positive over the longer term because the US is starting to use shale gas as an energy source and we think that has strong prospects for making them energy independent, which will go a long way to solving their problems in the long-term," he said.
Little of GESB's $13 billion funds under management are exposed to Europe, so Mr Dwyer said it was unlikely - barring another global financial crisis - that events on the continent would dent its members' returns.
Last year GESB's default fund was ranked about 11th in Australia as sharemarkets rebounded.
However, he said that efforts to unwind debt in major economies could limit the upside in local shares in the near-term.
"Sharemarkets rallied very strongly last year, and they did so because the really bad outcomes such as a euro collapse, or a China hard landing or the US going over the fiscal cliff didn't happen," he said. "But the longer-term issues are still there - there is a big overhang of debt and corporate earnings will have to rise in order to justify the rally we have already seen."
The broader financial developments prompted the deputy chairman of the Australian Prudential Regulation Authority, Ross Jones, to warn funds this month not to over-invest in infrastructure assets that could adversely affect their liquidity.
Mr Rosario, who moved from Westscheme to take the reins at GESB in January last year, agreed the freezing up of credit markets had been one of the major salutatory lessons investors had taken from the crisis.
During the turmoil Westscheme - which merged in 2011 with fellow industry fund AustralianSuper - had some difficult years as some of its major investments were in illiquid infrastructure plays, but they have since recovered to deliver solid returns.
Mr Rosario said his new role was less hands on and more about mentoring, and that GESB had positioned itself well with a strong investment committee.
He said despite GESB's 330,000 mainly public servants being given the ability to choose a different fund last year, it had increased its numbers by about 5000 in net terms, which contrasted with conservative internal estimates it would lose about 9 per cent of its members.
He also expected GESB to complete the process of outsourcing its back office functions, as demanded by Treasury, by the end of the year.