Infrastructure not SMSF panacea

Infrastructure assets

Making infrastructure assets more available to SMSFs may not provide the post-COVID-19 investment solution for the sector as first thought.

A panel of industry thought leaders have questioned whether making infrastructure assets more accessible to SMSFs will provide a good post-COVID-19 investment solution for the sector or be an effective catalyst to spark the recovery of the Australian economy.

“The problem with infrastructure has been the non-availability of retail-sized assets and I think infrastructure in and of itself is challenged right now anyway because we’ve got the supply side and demand-side shock, which means Sydney Airport is probably off its peak a little bit,” Investment Trends chief executive Michael Blomfield said during the thought leadership session at the recent SMSF Association Technical Day 2020.

Fellow panellist Challenger chair of retirement income Jeremy Cooper pointed out the complex nature of infrastructure assets and the need to be discerning as to which of these assets would be appropriate for SMSF investors.

“There was somebody the other day suggesting that self-managed super funds should invest in [Sydney’s] second airport,” Cooper noted.

“[In the main] we’re talking about infrastructure here that’s solidly operating, has a cash flow and all the rest of it. You can’t put retiree money into a greenfield project that’s not going to make money for 25 years.”

The SMSF Association and Financial Services Council in July made a joint call to open up infrastructure to SMSF members to provide a solid investment opportunity and a means to help economic recovery after the coronavirus pandemic is over.

However, SMSF Association chief executive John Maroney assured the panel this is not the only asset class the industry body is considering to achieve this kind of outcome.

“We have been talking up infrastructure as a particular example, but we will broaden that out. We did have discussions with Nev Power, as chair of the National COVID-19 Coordination Commission, and the Treasury people supporting, and they certainly flagged some interesting areas [for investment], perhaps of a smaller scale, [such as] social and affordable housing,” Maroney noted.

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