The SMSF Association is in discussions with government at several levels to allow SMSF trustees greater access to infrastructure investment opportunities.
“The SMSF Association is working very hard with government to try and open up what is probably the last vestige of investment opportunities that can go into infrastructure that is sitting in SMSFs,” SMSF Association chief executive Andrea Slattery said.
The move coincided with recent findings from the Investment Trends/Morningstar “SMSF Investor Product Needs Report”, commissioned by the association, which revealed infrastructure was an asset class attracting attention from SMSF members as they looked to divest their allocations to cash.
“They are seriously looking for things like infrastructure, but the infrastructure investment for SMSF trustees and individual retail investors is actually closed because of monopolies and economies of scale,” Slattery said.
She said the SMSF sector was a good fit for infrastructure investment because it was a large pool of capital available for allocation to the asset class and SMSF trustees were very familiar and very capable of investing for a long period of time in arrangements associated with infrastructure.
“So we’re doing a lot of work with government, both federal and state, in helping them understand there are only very few barriers preventing SMSF and individual retail investors to invest in infrastructure,” she said.
The types of elements the association was highlighting as requiring change included the structure of some infrastructure investments that did not allow all of the benefits to pass through to the investor and legislative design issues around the definition of wholesale and retail investors.
On the latter point, Slattery said it was not only change at a legislative level that was required.
“We actually need the large investment houses or the large infrastructure investments themselves to be open to accepting retail investment clumps of say $50,000 or $5000 because it’s a bit hard to invest in something where the minimum amount is normally around half a million dollars,” she said.