Self-managed superannuation fund (SMSF) investors are increasingly warming to infrastructure investments, according to a portfolio manager for the asset class.
During a recent review of the investor register for the AMP Capital Core Infrastructure Fund it was noted a significant proportion of the direct retail participants were actually SMSF investors.
“I was looking at my register and I actually thought there are all of these retail people off the street on it. I was then told they’re not retail people, they’re self-managed super funds,” AMP Capital Investors infrastructure portfolio manager Perry Lucas told InvestorDaily.
“I was really quite excited because it was good to see sophisticated investors come up with infrastructure as part of their investment strategy.”
In all, Lucas estimated at least 10 per cent of total inflows for the Core Infrastructure Fund was coming from the SMSF sector.
He cited three reasons why the fund would have SMSF appeal.
Firstly, the investment vehicle offered SMSF trustees the opportunity to participate in infrastructure investments such as Melbourne Airport that had traditionally been the domain of institutional investors only.
Secondly, because the fund consists of a portfolio almost equally weighted between unlisted and listed infrastructure assets, it gives SMSF members a good level of diversification for the asset class.
And finally, investing in the fund will help neutralise volatility.
“The fund has a volatility quotient of 8 per cent, which is quite low. We’ve got this proposition in infrastructure of being able to offer people equity-type returns, but with a much tighter volatility control than they get if they just try to take their exposure solely out of the listed market,” Lucas said.
“Small super investors are no different to large super funds; they’re all trying to move away from market risk.”
A further different characteristic of the fund was it employed a target return approach rather than aiming to beat an index.
The AMP Capital Core Infrastructure Fund has delivered an average return of 8 per cent over the past few years. The portfolio looks to invest in assets such as airports, utilities and toll roads in developed markets and deliberately avoids greenfield projects.
The minimum investment amount is $30,000 and Lucas recommends an investment in the fund should be held for about 10 years.
