Compared to how funds were allocated to March this year, industry super funds have slightly decreased their allocation to infrastructure in the six months to September – dropping from 11 per cent to 10.6 per cent, according to the latest Australian Prudential Regulation Authority (APRA) data.
In comparison, public sector funds upped their allocations to the asset class from 7.8 per cent in March to 8.6 per cent in September, while retail funds saw a slight decline from 3.8 per cent to 3.5 per cent, and corporate funds a slight bump from 5.2 per cent to 5.4 per cent.
The figures come amid growing market appetite for infrastructure investments and continued positive sentiment for the asset class, with a portfolio manager noting last month that the fundamental needs of society provide a compelling case for the continued relevance of this asset class moving forward.
Namely, at an event in Sydney last month, Sarah Shaw, chief investment officer at 4D Infrastructure, said while uncertainty creates volatility, focusing on infrastructure’s strong fundamentals and market inefficiencies allows investors to benefit from inevitable themes.
“Why I say this ‘must happen’ is because it doesn’t matter who is running the US, it doesn’t matter the direction of interest rates, it doesn’t matter what the market is doing. These investments must happen or the world is going backwards,” she said.
Based on the APRA data released on Thursday, infrastructure again ranked as the third most favoured asset class in industry fund portfolios, trailing behind equities (58.2 per cent) and fixed income (20.4 per cent).
Equities saw the biggest increase in allocations from March to September, with the figure moving from 55.4 per cent to above 58 per cent in industry fund allocations, while retail funds held an allocation of 60.2 per cent to the asset class.
Fixed income was also broadly popular, with retail funds committing 18.8 per cent to this asset class, flat from March.
The real discrepancy was in funds’ commitment to infrastructure depending on their type, with industry funds favouring it above all others.
Property, however, was again fairly evenly distributed, with industry funds allocating 7 per cent to the asset class and retail funds dedicating 6.2 per cent.
Retail funds, like in March, led the charge with private debt with an allocation of 1.2 per cent, compared to industry funds’ 1 per cent.
As for alternatives, this asset class was most popular among corporate funds with an allocation of 2.9 per cent, a slight decline from 3.3 per cent, while industry funds allocated 1 per cent down from 1.2 per cent in March, and retail funds 0.9 per cent.
Broken down along fund lines, APRA’s data revealed AustralianSuper had the biggest allocation to equities with $229.8 billion, followed by ART with $182.4 billion, and Aware Super with $108.3 billion.
Regarding infrastructure, the country’s biggest fund allocated $43.96 billion to the asset class, while ART allocated $32.1 billion, and Aware Super $20.3 billion.
The largest fixed income allocation came from ART, reaching just under $99 billion, followed by AustralianSuper with $70.3 billion, and Aware Super with $45.2 billion.
ART is also the biggest investor in property, with an allocation of $22 billion, followed by UniSuper with $17 billion, Aware Super with $14.1 billion, and Australian Super with $13.8 billion.
