Super funds boss sees value in market
Super funds boss sees value in market

The investment boss of one of Australia's biggest superannuation funds says the European debt crisis in Europe will get worse before it gets better, but he does not think that is a bad thing.

Hostplus chief investment officer Sam Sicilia sees the continuing volatility in investment markets and sentiment as presenting an array of opportunities to buy good growth assets at discount prices.

The chief money man at the $10 billion industry fund said he had invested $600 million in shares since August last year amid worries about the European debt crisis and general gloom in markets.

Mr Sicilia said it was difficult to see how good companies that might have been worth buying a few days ago were suddenly not worth buying because they had become cheaper because of bad sentiment.

"When there is a drop in equity markets, now is the time to buy into good markets. Remember the Warren Buffet philosophy: be greedy when others aren't," he said. "When nobody wants it and they start selling it off, that's when you start feasting."

The highly-rated Hostplus is an industry superannuation fund with its roots in the hospitality, sport, tourism and recreation industries, run by a board with a mixture of union, industry and independent directors.

Its balanced fund had an average annual return of 6.5 per cent in the 10 years to the end of April, a 1.2 per cent annual return since April 2007 and 3.1 per cent in the first three quarters of 2011-12, which included the share market rally in the first part of calendar 2012.

The share market has since been beset by worries about the Greek's government debt and concerns about the financial stability of Spain, Portugal and Italy,

Mr Sicilia said he did not rush to get updates about what markets did overnight because he was navigating an investment course set three or four years ago.

"You really have to think about the long term and see through these short term events because we know that time is a lever that solves a lot of these problems," he said.

In the meantime, the fund manager believed the debt crisis in Europe could escalate before European governments moved to solve the it. Politicians were unlikely to take risks by stepping in too early with radical solutions, but would eventually be compelled to act when civil unrest increased.

Mr Sicilia said intervention was likely to involve the European Central Bank effectively printing money, taking troubled debt up to the government and forgiving some problematic debts.

He expected some good infrastructure assets to be sold in coming years as governments sought cash, but there might not be too many bargains because cashed-up pension funds from around the world were hunting such opportunities. The better bargains were likely to be on equity markets.

"We are careful about making sure we have the powder dry - the money available - to make sure we can take advantage of opportunities that become available," he said.

When nobody wants it and they start selling it off, that's when you start feasting. "Sam Sicilia

The West Australian

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