Australia Wealth Fund's Arndt on US Market Volatility

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Transcript

00:00The US has been a remarkable economy and a remarkable market and it's done incredibly well

00:05since World War II. And we have extremely large exposure, it's almost half the portfolio and

00:13we've benefited greatly from that, as has the world. But the reality is that at the same time

00:19that the rest of the world is growing faster than the US, so while the US still has the biggest

00:23economy in the world, it's a smaller proportion of the world. Same with the capital markets.

00:30Except in the last few years, obviously with the tech boom and AI, we've had a concentration.

00:37The rules of the game are at risk and are changing and for a non-American global investor, we want

00:44to know what are the rules around trade, capital flows, taxes, regulation, and they are changing

00:56and they're changing with not much predictability. And that does concern us. And as a sovereign

01:02investor into the US, some of the retaliatory tax provisions in the One Big Beautiful Bill

01:09Act, which were repealed, really alarmed us. And as a result of that and some of the volatility

01:16we've seen around trade policy after Liberation Day, we've already made the decision to reduce

01:25our US exposure and have done that and continue to do that. That's not to say that we don't

01:30think there are great opportunities in the US, it will remain our largest exposure, but

01:35it's just a riskier place to invest than it used to be. And we've lifted the expected return

01:40we need as a result.