As superannuation funds move away from cash and equities, infrastructure investments will emerge as a popular way for institutional investors to diversify their portfolios, according to Colonial First State Global Asset Management (CFSGAM).
"There is no asset class more suited to institutional investors than alternatives, particularly infrastructure. But they need to have long-term vision," CFSGAM head of infrastructure asset management Christine O'Reilly told the 2009 International Corporate Governance Conference in Sydney this week.
O'Reilly said there was a shortage of equity and debt capital in the unlisted space.
"Therefore, those who have capital can buy well with limited competition. They will also have time to have robust negotiations and thorough due diligence," she said.
Industry Funds Management (IFM) chair Garry Weaven said alternative assets had performed well despite the global downturn.
"The buying opportunities in infrastructure will be huge. It is really important that funds find ways to profitably invest in these areas. But we do have to look past asset classes and look at what assets have robust future revenue streams," Weaven said.
However, Mercer Canada partner Jane Ambachtsheer said the asset class had not escaped from the crisis unscathed.
"The diversification in alternatives hasn't completely worked and the global financial crisis has led to a mistrust of experts and active managers," Ambachtsheer said.
O'Reilly said trust needed to be restored for markets to return to normal levels.
"Going forward we need an understanding of risk and this can't come from regulators; it has to be demanded from the investment community," she said.
