Industry funds leading the charge on infrastructure, APRA data reveals

APRA’s latest quarterly superannuation statistics reveal a growing trend among industry funds towards infrastructure investments, with approximately 11 per cent allocated to this asset class as of March 2024, of which 9.8 per cent is directed specifically to unlisted infrastructure.

In comparison, public sector funds hold 7.8 per cent in infrastructure, while retail funds and corporate funds hold 3.8 per cent and 5.2 per cent in the asset class, respectively.

In terms of unlisted infrastructure, the asset class makes up just 1.5 per cent of retail fund portfolios.

The figures come amid growing market appetite for infrastructure investments, with assets like airports and toll roads highlighted as potential winners this year, against the backdrop of potential interest rate cuts by global central banks and rising passenger volumes.

Earlier this month, Australia’s sovereign wealth fund, the Future Fund, announced its first direct investment in an Australian toll road, completing an acquisition of a 19.8 per cent interest in ConnectEast Group – owner of the largest toll road network in Victoria with a 39-kilometre toll road (EastLink) and a one-kilometre bypass (Ringwood Bypass) – alongside its partner QIC.

Previously, IFM Investors, which manages $108.8 billion for its 686 institutional investors, including its 17 Australian industry super fund owners, also described infrastructure as the “new portfolio cornerstone” as interest in the asset class ramps up globally.

Based on the APRA data released last Friday, infrastructure ranks as the third most favoured asset class in industry fund portfolios, trailing behind equities (55.4 per cent) and fixed income (19.8 per cent).

Moreover, equity emerged as the most favoured by all fund types, with retail funds leading the charge with an investment weight of 59.7 per cent. Fixed income was also broadly popular, with retail funds committing 18.9 per cent to this asset class. 

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 7.4 per cent to the asset class, and retail funds dedicating 6.2.

Retail funds, however, lead the charge with private debt with an allocation of 1.2 per cent, compared to industry funds’ 0.7 per cent.

As for alternatives, this asset class was most popular among corporate funds with an allocation of 3.3 per cent, while industry funds allocated 1.2 per cent and retail funds 1.0 per cent. 

Overall, at the end of March superannuation was valued at $2.38 trillion, according to APRA.

Breaking these figures down, the regulator said 59 MySuper products held $1.01 trillion while 830 Choice products held $1.2 trillion.