Infrastructure gearing up for larger chunk of super portfolios

InvestorDaily

Infrastructure has been touted as a potential winner in the year ahead as it benefits from a global move towards rate cuts; however, an investment executive has suggested infrastructure is already an established trend among super funds. According to the Australian Prudential Regulation Authority’s (APRA) latest quarterly statistics, there’s a growing trend among industry funds towards infrastructure investments, with approximately 11 per cent allocated to this asset class as of March 2024, of which 9.8 per cent is directed specifically to unlisted infrastructure. In comparison, public sector funds hold 7.8 per cent in infrastructure, while retail funds and corporate funds hold 3.8 per cent and 5.2 per cent in the asset class, respectively.

According to Simon Hudson, joint investment officer at superannuation-focused asset manager Playfair Asset Management, infrastructure is likely to play a larger role in portfolios moving forward. “The risk/return profile of high-quality infrastructure assets can be incredibly well aligned to that of a super fund,” he told InvestorDaily. A typical super fund targets a return of CPI plus 3 per cent, he explained, and for the average balanced fund, this translates to a target of around 5–7 per cent per annum.

The rest of this article can be found at investordaily.com.au.