FSC backs SMSFs on unitised infrastructure investment vehicles

The self-managed superannuation funds (SMSF) sector has always wanted better access to infrastructure investment and has won the backing of the Financial Services Council (FSC) to achieve it via unitised investment vehicles. 

The SMSF Association and the FSC have jointly urged the reconstituted National COVID-19 Commission (NCC) Advisory Board and the National Cabinet to expand the role that superannuation funds can play in infrastructure investment as a critical element in generating the economic growth needed to lift Australia out of recession. 

The two organisations have noted that they represent more than $1.7 trillion of the $2.7 trillion superannuation pool and, on that basis, have joined forces to present a common policy front that calls on the NCC to recommend the establishment of unitised, transparent and liquid investment vehicles to house infrastructure assets.  

Their statement said that infrastructure investment vehicles would make them attractive to all superannuation investors and overcome community concerns around illiquidity and asset pricing in circumstances where, in the past, SMSFs had been largely excluded from this asset class.  

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“It has always been a bone of contention with the Association that SMSFs have been largely precluded from investing in infrastructure,” SMSF Association chief executive, John Maroney said. “The benefits of this asset class to SMSFs include managing longevity risks in retirement by offering long-term investment options with low volatility, moderate yield relative to inflation and capital growth, and the desire of trustees to have control via direct investing.” 

“Infrastructure offers a relatively low-risk investment alternatives to cash and term deposits at a time of record low interest rates,” he said. “So, the opening up of infrastructure investment to SMSFs in a unitised, liquid form would provide a new avenue for SMSF investment that could help fund Australia’s recovery and future infrastructure investment needs.” 

FSC chief executive, Sally Loane said: “Opening infrastructure investment to SMSFs and superannuation investors would democratise investment in critical domestic infrastructure, as well have the benefit of offering stable, predictable income streams to fund Australians’ retirement. 

“Stronger infrastructure investment would allow the National Cabinet and State Governments to turbocharge asset recycling to finance new job-creating infrastructure projects and create jobs.”