Emerging infrastructure developments were capturing the attention of SMSF investors, with allocations to the asset class primarily being driven by advisers, according to AMP.
At an AMP SMSF roundtable last week, AMP Capital head of SMSF Tim Keegan said the global infrastructure investment theme had been captured by the institutional market and grown from $500 billion to $2.2 trillion in the past decade.
“People reading about shale gas and what’s going on in the United States are starting to [ask] how they play a role in this, and to go and buy 40 stocks in eight countries is simply not possible and frankly I’d prefer to have 80 investment professionals help me choose those stocks so they are interested in these themes and educated around what’s going on,” Keegan said.
“We’re seeing that being translated into investments in these types of funds, which is good because as part of the portfolio it can play a really nice role in the middle, so not being as volatile as your direct equities exposure and clearly up the risk curve from cash and bonds.
“[SMSF trustees] are educated and voracious readers looking to make informed decisions around their portfolios.”
He said infrastructure investments were currently highly topical.
“When it comes to patronage risk, so infrastructure assets around toll roads and the like, the memory of the trustee may prevent them from really thinking about it,” he said.
“However, there is this emerging theme where there’s going to be $57 trillion spent on infrastructure and there’s going to be a lot spent in Australia – Tony Abbott wants to be the infrastructure prime minister – so people are recognising that there is a story here.
“But I think it’s been adopted by planners much more than direct trustees – [following discussions] with planners this year, and I’ve seen a lot of them, asset allocation to infrastructure is absolutely occurring. Without a doubt.”
He said allocations were around the 10 per cent to 15 per cent mark.
“The early adopters are [switched] on and I think it’s going to very much be a growing story, whether it’s about water security or telecommunications or transport or energy,” he said.
“There are so many interesting themes in infrastructure.”
AMP Capital recently added a Global Listed Infrastructure Fund to its product suite.
“We’ve had a significant amount of interest and after talking with those trustees I think that they get it,” Keegan said.
“The idea of the stability of the income stream is very attractive and particularly when they’re thinking about a long-term hold, the biggest constraint has been the liquidity, so that’s where the listed versus unlisted piece plays out.
“I think there’s still some concern around buying a direct infrastructure asset rather than a listed one.
“While it means the correlation is closer to the markets … our research says when comparing our Global Listed Infrastructure Fund to an industrial fund in the United States, you get 80 per cent of the upside but 50 per cent of the downside, so it’s a great way to be exposed to global equities at a lower part of the risk profile and people are looking at that part of their portfolio.”
He said in order to support and capture the growing infrastructure interest, AMP believed it was important to break down the barriers.
“In a world of the ubiquitous web and digital transformation, the demand for content is clearly a really big part in the role that asset managers can play with SMSFs,” he said.
“We launched our SMSF suite of products at AMP Capital back in May and alongside that we’re about exposing investment insights to the end trustee and to their advisers.
“That’s been embraced so far. We’ve had 40,000 visits to the site and 6000 trustees signed up to newsletters and white papers.”
