NSW State Super’s investment in unlisted infrastructure has grown by $500 million since June 30 last year, as it seeks to service pension drawdowns.
The $38 billion defined benefit fund’s allocation to alternative assets overall increased from 7.6 per cent to 10.8 per cent over the past nine months. Chief investment officer Martin Drew said the shift was partly due to poorly performing listed equities and listed property trusts: “;The listed stuff has had a shocking time, so [the alternatives] have had a bit of a free kick.”; But the fund had also boosted its unlisted infrastructure commitment from $1.5 billion to a little over $2 billion, almost entirely from cash, he said. “We like to buy fast-to-mature, developed assets because it secures steady inflows to service our ongoing defined benefit payments,” Drew said. The unlisted infrastructure assets are managed almost evenly between Deutsche’s RREEF Alternative Investments and Access Capital Advisors, although Drew said Access was getting most of the new money coming into the fund. State Super is currently conducting its annual strategic asset allocation review, and it is likely that the target weight of 10 per cent for alternatives will be increased, Drew said. Drew added that State Super was considering allowing more credit within its passively managed fixed-income mandate with State Street Global Advisors, but that the majority of that mandate was likely to remain in sovereign bonds.
Future Fund chief investment officer Ben Samild said that FY24 has been a great year for alpha creation, thanks to strong returns in equities and, unusually, across multiple hedge fund strategies all at the same time. He reflected the past few years have been “a difficult time to be an asset owner and to generate positive returns for risk assets” but the Future Fund is tracking well of its long-term mandate.
Simon Hoyle and Darcy SongSeptember 4, 2024
