Australian superannuation funds looking to invest in infrastructure need to know what they are buying, according to Future Fund head of infrastructure and timberlands, Dr Ralph Arndt.
Addressing the Association of Superannuation Funds of Australia (ASFA) national conference, Arndt said that while the Future Fund had a substantial exposure to infrastructure it was by no means the most appropriate investment for super funds.
"Infrastructure has no divine right to attract capital," he said.
Indeed, Arndt said that in many respects infrastructure investment was illogical because it usually involved high leverage and complex implementation.
However he said that for the Future Fund the returns for the risk had been reasonably good.
"But you need to know what you're buying," Arndt said.
"Infrastructure assets have to fight for their right to survive in a diversified portfolio," he said.
Amid a challenging market environment, three super fund CIOs have warned against ‘jumping at shadows’.
The professional body is calling for the annual performance test to transition to a two-metric test, so it better aligns with the overarching duty of super fund trustees to act in the best financial interests of their members.
AustralianSuper, Rest, and HESTA agree on the need to retain and enhance the test, yet they differ in their perspectives on the specific areas that warrant further refinement.
Australia’s second-largest super fund has confirmed it is expanding its presence in the UK following significant investment in the region.
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