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(Bloomberg) — The chief investment officer of UniSuper, one of Australia’s largest pension funds, is brushing aside concerns about the downturn in global tech stocks, saying that spending in the sector can support other parts of the market.
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The selloff appears overdone, particularly for companies like Salesforce Inc. whose software is heavily integrated into business processes and tough to overhaul, said John Pearce, who oversees the A$166 billion ($117 billion) fund. Large artificial intelligence investments in tech firms could also boost revenues in other industries, he added.
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“That is indeed why we are seeing a broadening of the market rally outside tech,” he said in an investment update Friday. “This is a very healthy development and once again demonstrates the benefits of diversification.”
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Concerns that AI will erode software-company revenues have triggered sharp market swings in the past few weeks. A US-listed exchange-traded fund tracking the sector has fallen 30% from a high last year, while Salesforce shares are near an almost three-year low and trade at about half their 2024 peak.
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Pearce said while tech shares have faltered, energy and materials stocks have been climbing this year. Gold is also still holding on to gains despite a recent correction. While UniSuper has bought shares tied to bullion, it hasn’t purchased the metal directly.
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Because gold doesn’t generate income, UniSuper treats it more like a currency, according to Pearce. The fund’s strategy “steers us away from speculating on currency movements,” allowing it to avoid losses when gold prices swooned, he said.
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UniSuper had 35% of its balanced portfolio in international stocks as of Sept. 25. It lists Nvidia Corp., Microsoft Corp. and Apple Inc. among its major holdings.
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In Australia, the market is “trudging along OK,” though the Reserve Bank’s policy pivot may weigh on shares, Pearce said. Still, this month’s interest-rate hike was “the right decision to make,” he added.
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