Tailored infrastructure allocation and application to SMSF portfolios will be the next iteration of the asset class’s education efforts, particularly during 2018.
“For SMSFs, the process of basic education has already happened so it’s more about the nuanced education, so why this type of asset class is a good fit in a diversified portfolio,” RARE Infrastructure portfolio manager Charles Hamieh told selfmanagedsuper.
“The characteristics of infrastructure are easy to sell: the predictability and resilience of cash flows et cetera most retail and SMSF investors understand and they get it from a technical point of view, but how to use that in the context of a portfolio is the next stage of educating.
“[To compel SMSFs to allocate] is about that next piece of education.”
Hamieh revealed risk-adjusted returns were especially compelling to SMSF trustees.
“Especially if you’re managing your own super fund, I believe the key is to get a certain part of your portfolio generating a very appropriate level of absolute return,” he noted.
“If you can get an asset class into your portfolio that immediately diversifies your return and offers a low volatility of return, but an absolute return of 8 per cent to 10 per cent through a cycle, that’s a pretty compelling proposition for retirees.
“So I think that’s the more attractive elements – delivering a return in a risk-adjusted framework, and so risk is a very important part of what we do.”
RARE Infrastructure will increase its education efforts to all investor channels next year.
“For us, the process of education has already happened – it’s not hard for us to get in front of clients and the various channels and talk about infrastructure as it’s widely accepted in the Australian market, but again it’s about the next piece of education,” Hamieh said.
“And it’s been a good year for the asset class generally and returns have been strong across the sector.”
RARE Infrastructure’s targeted returns for its Value Fund and Income Fund are between 8 per cent and 10 per cent, while its Emerging Markets Fund targets between 12 per cent and 15 per cent.
Hamieh said the Value Fund has been the most compelling for the retail and SMSF channels.