SYDNEY, July 4 (Reuters) - Australia's third-largest pension fund expects global equity markets to lose steam and go sideways in 2025 after a blockbuster run in U.S. equities helped drive a second year of double-digit returns at the fund.
The A$175 billion ($118 billion) Aware Super's primary portfolio returned 11.02% for the year ended 30 June, up from 10.7% a year earlier, according to a statement on Thursday.
But after a 23% run for the U.S. S&P 500, international equities are looking relatively expensive, according to chief investment officer Damian Graham.
Markets are also likely to be more volatile because of uncertainty about the pace and extent of rate cuts in the U.S. and other developed markets, he added.
"I do think you'll see equity markets more likely to trade sideways than up or down but with some more volatility in the nearer term as that plays out in the next three months or so," he said.
"My guess is that we might see a flatter year in 2025 than we saw in 2024."
While the fund would moderate its equity exposure next year, Graham said the shift would only be "at the margin".
Aware said its greater exposure to overseas equities helped give it an edge over its peers. Australian funds with similar portfolios showed a median return of 10.5% over the same period, according to SuperRatings.
($1 = 1.4894 Australian dollars) (Reporting by Lewis Jackson; Editing by Edwina Gibbs)
