Annoyed industry executives challenged super fund managers in a tense session at the Australian Logistics Council’s Forum on March 2.
Things got testy on Wednesday afternoon at the ALC’s 2016 Forum in Sydney, when increasingly irritated industry executives asserted that super funds ought to back Australia by investing in national infrastructure.
In the forum’s session on the role of infrastructure funds in the Australian logistics industry, delegates on the floor began to get annoyed when super fund manager Peter Hicks, head of asset management at CP2 Limited, and Duncan Smith, head of consulting at Jana Investment Advisers, revealed that super fund investors are increasingly investing overseas instead of in Australia.
Hicks and Smith had told the ALC delegates that overseas buyers are labelling Australian infrastructure assets as ‘strategic purchases’ and so are paying an “out of market price”.
Australian super fund managers, being focused on providing financial returns for the super fund, both would not, and could not, do deals in such situations, the duo said.
Although stating that Australian super funds can, and do, invest in Australian assets if the deal is right, they then went on to explain that Australian super fund managers are currently investing overseas as (a) there are often not enough deals in this country, (b) that they are being out-bid by competitors anyway, and (c) that they are teaming up with other funds to spread and dilute the investment risk.
However, some delegates appeared to view that explanation as an admission that Australian super fund managers are deliberately shunning Australian infrastructure deals.
One clearly annoyed delegate repeatedly asserted that Australian funds should invest in domestic assets, such as Inland Rail, to help build the infrastructure of the nation.
“Your premise is invalid,” a clearly exasperated Hicks responded, arguing that “Australian super funds are investing in global market because it is a global market-place.”
Smith jumped into the defence: “Look, the asset still gets built… it’s just that we won’t own it.”
But that statement was immediately challenged by a second irritated delegate. “…wouldn’t most Australians accept 1% less return if the investment was in Australia?” he asked rhetorically.
Smith responded that super funds are not allowed to take such factors into account under superannuation law.
“The legislation requires us to invest in the best financial interests of the members,” he said.
This article was originally published by Rail Express affiliate Lloyd’s List Australia.
