(Bloomberg) -- Brighter Super, a A$32 billion ($21.3 billion) Australian pension fund, has reduced its allocation to domestic equities, citing the impact of the slowing Chinese economy.

Brighter Super Chief Investment Officer Mark Rider said his team recently pulled back on domestic equities from about 27% of his firm’s default investment option to around 24.5%. The fund is looking to invest more in private equity as its seeks to diversify and has also increased its allocation to international stocks.

“We’ve tempered the home bias because when we look at the differing opportunities in markets to us, there seems to be somewhat more offshore than in Australia,” Rider said in an interview. “And Australia is facing a headwind from China” amid weaker economic growth in Asia’s biggest economy.

Rider, who began his career at the Reserve Bank of Australia and is also a former staffer at UBS Group AG, has grown his investment team to 12 from just 3 when he joined Brighter Super in 2022. 

Australia’s A$3.9 trillion pension industry is investing proportionately less of every dollar in the local stock market as it grows — it’s one of the world’s most rapidly expanding retirement pots. Instead, more investment in private markets and other overseas assets has seen foreign holdings increase to almost half the sector’s total asset base. 

“Now that we’re A$32 billion, we actually have a bigger scale,” said Rider. We want to “try to control and minimize our fees by undertaking co-investments.” 

The fund will continue to use external managers to source deals, Rider said. On top of building the fund’s 5% private equity allocation, it’s also targeting late stage venture capital and pre-IPO opportunities, he said.

“Our objective is for the fund in coming years to grow maybe up to A$45 billion,” he said.

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