Australian superannuation fund Cbus is seeking to lift its infrastructure exposure by A$1bn (€622m) to offset lower returns from cash and fixed income products.
Diane Callebaut, head of infrastructure with Cbus, told an industry event in Canberra: “We are putting to our investment committee a proposal to increase the infrastructure asset class allocation to 13%, which equates to investing approximately an additional $1bn into infrastructure in Australia and overseas.”
As at the end of July, infrastructure accounted for 11% the A$50bn fund’s total assets.
“Why have we done this? Because infrastructure provides a relatively high cash-flow through the economic cycle, and often provides inflation protection (if required) – this is due to the underlying characteristics of the asset class of providing essential services that lead to low demand elasticity.”
Based on the fund’s forecasts, the change to a higher infrastructure allocation had the potential to increase member returns by A$350m over 10 years, she said.
“While not a panacea for the current environment, infrastructure will play an important role in ensuring our members’ returns are more resilient,” she added.
“Given the evolution of the infrastructure strategy that commenced three years ago, Cbus is well-placed to effectively deploy the increased capital in the competitive market.”