INVESTINGINFRASTRUCTURE
Super-charged
I
ndustry superannuation funds have built their
reputationonbeingabitdifferentwhenit
comes to investing. Compared with their retail
andself-managedcounterparts,industry
funds typically hold a higher allocation to
infrastructure, private equity, hedge funds, start-ups
and direct property projects. They took the plunge into
infrastructure20yearsago–wayaheadofotherinves-
tors–andithasprovedtobeasmartmove,boosting
their investment returns.
Industry funds on the whole hold 9% of their total
assets in infrastructure compared with 2% for retail,
3% for corporate and 4% for public sector funds, accord-
ing to allocation figures from the Australian Prudential
RegulationAuthority(APRA).SMSFsholdnoinfra-
structure,accordingtotaxofficestatistics.“Ifyouare
anaverageinvestorinAustralia,youcan’tgetaccess
to this stuff,” explains Kirby Rappell, research manag-
er at SuperRatings.
Thetop10performersoverthepastthreeyearsto
the end of April are all industry funds that are typical-
ly big investors in these asset classes, according toSTORY
SUSAN HELY
SuperRatings. Typically, infrastructure has been a
strong performer in this low-return investment climate,
withitsrecordlowcashratesandplummetingfixed-in-
come yields. The Australian infrastructure fund run
by IFM Investors has returned 10%pa over the past
three years while the international infrastructure fund
has done even better, adding 12%pa.
Around 32 industry funds set up IFM 20 years ago
to gain access to infrastructure because there weren’t
many infrastructure vehicles. After several super fund
amalgamations,thenumberofIFM’sownersisdown
to 28 and the number of global and local investors has
swelled to 221. IFM’s $37 billion infrastructure portfo-
liohashigh-qualityinvestmentsinarangeofports,toll
roads, power companies, water filtration plants, aged-
care homes, pipelines and airports, including Sydney,
Melbourne, Perth, the Northern Territory, Brisbane,
Adelaide and Vienna and four in the Manchester Air-
ports Group.
Superannuation funds’ continual contributions mean
that there is a huge weight of new money looking for
an investment home. “These funds have new cash flowStrong,
reliable,
long-term
returns mean
everyone
wants a
sliceofthe
infrastructure
pie