Sep 30, 2026 · 32 min
Soul Patts shifts from equities toward cash and credit
Soul Patts has 20% in cash. Todd Barlow says everything else has to earn its place
Todd Barlow explains how higher rates have changed Soul Patts’ portfolio and why permanent capital supports a valuation-driven approach through market cycles.
- 1Higher risk-free rates have made cash more competitive, lifting Soul Patts’ allocation to roughly 20 percent.
- 2Acquisitions and asset allocation reduced listed equities from about 90 percent to roughly 40 percent of the portfolio.
- 3Soul Patts favors high-quality credit, downside protection and permanent capital over short-term stock-picking decisions.
Don't miss
Todd Barlow explains why permanent capital allows Soul Patts to look through short-term market noise and accept periods of underperformance.
The brief
Todd Barlow, CEO of Washington H. Soul Pattinson, describes a portfolio reshaped by higher rates, with cash now competing directly against risk assets.
Soul Patts has cut listed equities from roughly 90 percent to about 40 percent through acquisitions including Milton Corporation and the Brickworks portfolio.
The roughly 20 percent cash allocation is not a precise market call; it reflects relative value, while recessionary and late-cycle risks remain in view.
Barlow is selective about private credit, avoiding heavy exposure to real-estate development lending as the discussion turns to housing weakness and building costs.
After 22 years at Soul Patts, Barlow argues that asset allocation and market selection matter more to long-term returns than individual stock picking.
The episode’s clearest structural point is that permanent capital lets Soul Patts tolerate short-term underperformance while investing through cycles.
What was said on this episode
22 statements · 12 positive · 5 negative · 1 mixed · 4 neutral
SolPats’ current portfolio should support strong future dividend growth.
“the way that we've set the portfolio up today is that we should be able to grow into the future and we should be able to grow quite well”
Listen at 2:22
Additional investment risk should earn adequate compensation above risk-free cash.
“whatever risk that we're taking on top of that, we need to get paid for and we need to make sure that we're appropriately compensated for taking the risk”
Listen at 4:47
SolPats aims to protect downside capital while generating outperformance.
“we want to construct a portfolio that is defensive in its nature, that we protect capital on the downside, and we're also trying to generate outperformance along the way”
Listen at 6:49
SolPats has shifted from equity concentration toward a multi-asset portfolio.
“we have felt that it is appropriate to de-risk an equity-centric portfolio into one that is more multi-asset”
Listen at 8:31
AI may benefit some businesses while making others obsolete within ten years.
“who knows what the impact is going to be of AI on particular businesses and whether they're going to be beneficiaries or rendered obsolete”
Listen at 10:53
SolPats combines long-term investing with greater portfolio agility.
“we are still thinking about long-term trends. We're still thinking about the direction of travel and trying to invest with the wind at our backs. But we're just a lot more agile now than we used to be.”
Listen at 11:49
SolPats avoids traditional global technology investing because it lacks expertise there.
“we are just not traditional investors in. That's not to say that we don't believe in it. It's just not something that we're good at. So we stick to what we're good at.”
Listen at 12:33
Cash currently appears relatively more attractive than many alternative investments.
“at the moment we think that cash looks relatively more attractive than a lot of the other things that we're seeing”
Listen at 15:43
The economy appears late-cycle and subject to recessionary pressures.
“It does feel like we are late cycle. It does feel like there's recessionary pressures.”
Listen at 16:09
SolPats has no private-credit allocation to real-estate development.
“we have zero allocation to private credit in real estate development. Always have had.”
Listen at 17:34
SolPats’ private-credit book has returned about 14% annually for four to five years.
“we've been doing this for 4 or 5 years. It's sort of been consistently performing about 14% per annum”
Listen at 19:24
The Australian housing-construction market is at a cyclical bottom.
“we are, you know, at a cyclical bottom and we have been for a few years now”
Listen at 20:21
Australian housing construction appears to be beginning a cyclical recovery.
“we do feel like we're coming off the bottom”
Listen at 21:10
Brickworks should perform strongly if the housing cycle turns upward.
“if the cycle turns, we'll do very well”
Listen at 21:57
SolPats strongly favors domestic and global credit allocation.
“we're so big on allocating to credit, both domestically and globally”
Listen at 22:43
Energy is SolPats’ strongest current investment theme.
“the biggest thematic that we have that we've always liked, but we like more than anything else right now is energy”
Listen at 23:59
Asset selection and timing matter more to returns than individual stock selection.
“Asset selection, what to invest in, where to invest, when to invest, are all much more meaningful decisions to your overall outcomes than stock selection.”
Listen at 25:30
SolPats targets private-company portfolio returns above 20% IRR.
“if you look at our private company portfolio, we're targeting in excess of 20% IRR”
Listen at 28:20
Equities, especially higher-priced equities, appear fully valued.
“I do think equities are fully valued, particularly at the top end.”
Listen at 29:31
Better investment opportunities exist outside equities.
“I just think that there's better opportunities elsewhere.”
Listen at 29:50
SolPats sold its property portfolio for $1.9 billion.
“we sold that property for $1.9 billion or that portfolio for $1.9 billion”
Listen at 30:05
SolPats does not prioritize short-term asset-price fluctuations.
“we don't really worry about short-term fluctuations in asset prices”
Listen at 31:18
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.
Featuring
Brickworks
Australian Securities Exchange
AustraliaListen to the full episode and explore every guest, topic, and moment on PodLume.