(Bloomberg) -- Australian Retirement Trust, the A$260 billion ($174 billion) pension fund, plans to boost its private credit allocation in the coming year, seeking opportunities in Europe and North America. 

The nation’s second-largest pension fund wants to build its position to 2.5% in the coming six-to-12 months, up from just below 1.5% currently, head of investment strategy Andrew Fisher said in an interview, without specifying the target value of its exposure.

The firm is building its allocation in a “disciplined way,” allocating money to the lower risk, unlisted part of the credit market, he said. 

“There’s a lot of money chasing the space,” Fisher said, adding there were opportunities in global credit for small-to-medium size businesses. “We are competing with banks, which is why there’s a tendency to be offshore, because the banks have a pretty dominant position here.”

Other top funds in Australia’s fast-growing A$3.7 trillion pension industry have shown a growing appetite for private credit.

Cbus, which manages A$90 billion, plans to triple its global allocation to the asset class, while A$104 billion Hostplus is looking to add to its already record private credit holdings. The nation’s biggest pension fund, AustralianSuper, in December boosted its investment mandate with private-credit specialist Churchill Asset Management.

ART would use a blend of external managers and its internal team to build its exposure to the asset class, Fisher said.

ART recently became the latest Australian pension fund to open an office in London, joining rivals AustralianSuper and Aware Super. It already owned a stake in Heathrow Airport and was looking to grow its infrastructure and real estate portfolio in the region, Fisher said.

--With assistance from Chris Bourke.

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