AustralianSuper has highlighted a greater focus on direct investments as a major reason for its funds under management (FUM) increasing to above $100 billion.
The ability to pursue a direct investments strategy over recent years was itself a result of the growth and size of the super fund. At June 30 last year, the super fund had more than $91 billion in FUM.
“The members’ first business model at AustralianSuper has included undertaking a major internalisation of investment management, with the aim of driving down investment costs and [to] deliver strong returns for members. The fund has delivered a total return of just over 50 per cent over the past four years,” said Ian Silk, chief investment officer.
“AustralianSuper is also moving to play a bigger role on the global investment stage providing members access to some of the biggest and best deals worldwide,” he said.
These direct investment deals include:
- $1.1 billion purchase of a stake in the Ala Moana shopping centre in Hawaii
- $1.3 billion acquisition of 67.5 per cent stake in the King’s Cross development in London
- $5 billion purchase of Port Botany and Port Kembla in NSW as part of the Industry
Funds Management led consortium NSW Ports
- $7 billion Queensland Motorways deal as a member of the Transurban consortium
AustralianSuper declined to comment further on how the direct investment has helped returns, but did attribute the success to its fee levels as well. The fund’s administration fee has been frozen at $1.50 per week since 2009 with no additional asset based administration fee.
The combination of returns and fees means that a member who had $100,000 in the fund’s balanced option in 2006, and who received Superannuation Guarantee contributions based on average weekly earnings, would now have a retirement balance of more than $256,000.
AustralianSuper’s balanced option – with almost 75 per cent of member assets – delivered a return of 4.54 per cent for the 2015/16 financial year. This result is expected to put AustralianSuper within the top quartile of super fund results.