Australian super funds chase $220bn US investment goal
Australia’s super industry heavyweights are headed to the US next week as they ramp up plans to more than double investment in that market to $220bn-plus over the next ten years.
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Some of Australia’s largest industry super funds are headed to the US next week as a part of a long-term strategy which could see Australian super fund investment in the US more than double to $220bn-plus over the next decade.
Super Members Council executive general manager strategy and insights Matt Linden said the US is the top foreign investment destination for Australian pension funds.
“There is a significant opportunity to invest more,” he said.
“The US is the largest and most dynamic economy in the world, which is why we’ve been investing with the US for three decades.”
Super funds which are part of the delegation include Australia’s largest fund, AustralianSuper, which already has more than $80bn invested in the US, industry super investment vehicle, IFM Investors, Australian Retirement Trust, Hesta, Hostplus, Aware, Rest, CareSuper, Cbus, UniSuper and Brighter Super as well as the Future Fund.
They will attend a superannuation investment summit which will also involve Australia’s Ambassador to the US, Kevin Rudd, and Australia’s Consul-General in New York, Heather Ridout, the former chair of AustralianSuper.
The US currently attracts over one third of all private market investments that Australian pension funds make overseas.
Modelling by IFM Investors, the Super Members Council and Mandala predicts that total pension fund investments in US private markets could grow by some $80bn today to $220bn by 2035 in assets such as roads, ports and logistics, data centres, energy and telecommunications.
It argues that it could grow to more than $380bn “with deeper collaboration and partnerships between Australian pension funds and US governments, investors, and other stakeholders.”
But retail super funds have opted not to be part of the delegation, arguing privately that they do not feel the cost of the trip could be justified for them as being in the best financial interests of their members.
Some sources spoken to by The Australian this week have also pointed out that it comes at a time when regulators in Australia are already questioning super fund expenses including money paid to unions as well as sports sponsorships.
Several of the attendees, including IFM Investors and AustralianSuper, already have sizeable US offices.
But industry fund sources argue that the summit will provide the opportunity for high level meetings with officials of the new Trump administration in Washington and other US business leaders in New York.
They argue that having a high-level delegation provides the opportunity for more access to new infrastructure investment deals, as well as highlighting the investment potential of Australian super fund money in the US.
They also say that while retail funds are largely investors in public markets, industry funds are the fastest growing segment of the market with increasing exposure to private investment including big ticket infrastructure deals.
Australian super funds, led by IFM Investors, currently have some $35bn invested in infrastructure projects in the US.
It currently has a third of its infrastructure portfolio invested in the US across more than 30 states including the Indiana Toll Road, Freeport LNG in Texas, the Colonial Pipeline Company, Buckeye Partners, Swift Current Energy, GreenGas and data centre company, Switch.
The industry fund research estimates that Australian super fund investment in infrastructure in the US could rise to more than $170bn by 2035.
IFM Investors’ head of global external relations David Whiteley, said industry super funds were “constantly scouring the world looking for opportunities to grow Australians’ retirement savings.”
“This summit is about positioning Australia’s superannuation system as a reliable form of long-term capital, and creating stronger partnerships with our US allies,” he said.
“Australia’s super system is the fastest growing in the world, growing at twice the rate of global peers, and growing so fast that funds will need to continue investing significantly overseas to generate appropriate risk-adjusted returns for their members.”
AustralianSuper chief executive, Paul Schroder, who will be part of the delegation, said the US was a “diverse and sophisticated economy” which presented “an unparalleled opportunity to help more Australians achieve their best financial position in retirement.”
Originally published as Australian super funds chase $220bn US investment goal
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