A delegation of Australian super fund leaders will kick off in the US next week, visiting Washington DC and New York to meet government officials to foster greater collaboration between funds and US investment partners.
The US stop follows a visit to the UK in October last year with the aim of pressuring the UK government to take policy action to unclog its stagnant pipeline of infrastructure deals, especially around the energy transition. The delegation of funds held a series of briefings with UK think tanks and policy makers.
The US visit features Future Fund, AustralianSuper, Australian Retirement Trust, Cbus, Hesta, Hostplus, Aware Super, Care Super, Rest, Brighter Super and UniSuper; and industry bodies Super Members Council (SMC) and Association of Superannuation Funds of Australia (ASFA); as well as industry fund-owned asset manager IFM Investors.
The US visit aims to help establish Australian superannuation funds as the most trusted and reliable source of very long-term investment capital in the world.
At the Investment Magazine Chair Forum in early 2024 IFM Investors head of global external relations David Whiteley said success in that objective “will contribute to us getting access to the best deals, and the best networks”.
Whiteley said Australian funds must take a collective approach to compete effectively with giant pension funds in north America, Europe, the Middle East and Asia in unlocking global investment opportunities.
“We need to work together on how we address systemic risks, find the opportunities at a national and global level, and promote our system as the most reliable and trusted source of capital to ensure that we’re getting the best deals for our members,” Whiteley said.
Number two by 2035
Analysis by SMC suggests Australia’s current pool of retirement savings of about $4.4 trillion will overtake those of both Canada and the UK by 2035 to become the second-largest pool in the world. Analysis by the Thinking Ahead Institute suggests this could happen as soon as 2030.
The delegation to the US will focus specifically on opportunities as Australian funds grow to invest in US private assets including infrastructure. Modelling and data by IFM Investors, SMC and economics, strategy and policy consulting firm Mandala Partners more than a third of all private market investments made by Australian super funds overseas already goes to the US, and fund investments in US private markets are expected to grow from US$50 billion ($78.7 billion) today to US$140 billion by 2035.
A joint statement released ahead of the US visit said that “with deeper collaboration and partnerships between Australian pension funds and US governments, investors, and other stakeholders, this could be US$240 billion or more”.
It said that likewise, “Australian pension fund investments in American infrastructure could increase from US$20 billion today to US$110 billion by 2035, across roads, ports and logistics, data centres, energy and telecommunications”.
Unparalleled opportunity
Australia’s largest fund, AustralianSuper, already has about $83 billion invested in the US and an investment team located in New York. The fund’s chief executive Paul Schroder said in a statement that the “diverse and sophisticated [US] economy presents an unparalleled opportunity to help more Australians achieve their best financial position in retirement”.
Hostplus chief executive officer David Elia said in the same statement that building and strengthening relationships with key stakeholders in the US “will help us to unlock opportunities to more effectively deploy capital into this critical investment market with the aim of maximising the risk-adjusted returns we deliver to our members”.
And Rest interim co-chief investment officer Simon Esposito said the fund is “committed to exploring all avenues to grow the retirement savings of our two million members” and is “excited by this opportunity to unlock investment opportunities in the United States and explore future options to deliver financial benefits to our members back in Australia”.
Whiteley said the pace of growth of the Australian superannuation system means funds need to continually identify new opportunities to invest offshore “to continue investing significantly overseas to generate appropriate risk-adjusted returns for their members”.
Super Members Council executive general manager strategy and insights Matt Linden said the delegation is visiting the US “to go into bat for Australia’s super fund members”.
“The US is the top foreign investment destination for Australian pension funds, and there is a significant opportunity to invest more,” Linden said.
“The US is the largest and most dynamic economy in the world, which is why we’ve been investing with the US for three decades. It’s a win-win – our investments stimulate and strengthen US businesses helping them grow, while Australian super fund members’ retirement savings are boosted from investing in the best US assets.”
