Australian superannuation funds looking to invest in infrastructure need to know what they are buying, according to Future Fund head of infrastructure and timberlands, Dr Ralph Arndt.
Addressing the Association of Superannuation Funds of Australia (ASFA) national conference, Arndt said that while the Future Fund had a substantial exposure to infrastructure it was by no means the most appropriate investment for super funds.
"Infrastructure has no divine right to attract capital," he said.
Indeed, Arndt said that in many respects infrastructure investment was illogical because it usually involved high leverage and complex implementation.
However he said that for the Future Fund the returns for the risk had been reasonably good.
"But you need to know what you're buying," Arndt said.
"Infrastructure assets have to fight for their right to survive in a diversified portfolio," he said.
The proposed reforms have been described as a key step towards delivering better products and retirement experiences for members, with many noting financial advice remains the “urgent missing piece” of the puzzle.
Jim Chalmers has defended changes to the Future Fund’s mandate, referring to himself as a “big supporter” of the sovereign wealth fund, amid fierce opposition from the Coalition, which has pledged to reverse any changes if it wins next year’s election.
In a new review of the country’s largest fund, a research house says it’s well placed to deliver attractive returns despite challenges.
Chant West analysis suggests super could be well placed to deliver a double-digit result by the end of the calendar year.