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Infra, property boost Prime Super returns

The $2.29bn Aussie super fund singled out its partnership with Whitehelm Capital as ‘key’ to the outperformance.

Prime Super last year posted strong returns largely driven by its infrastructure and real estate portfolio, according to its latest annual results.

Lachlan Baird, chief executive of the A$3 billion ($2.29 billion; €2.15 billion) super fund, said its partnership with Whitehelm Capital had been ‘one of the keys to [its] success’.

Whitehelm is one of the fund’s advisers, helping the fund gain exposure to infrastructure. In 2016, the firm made two infrastructure investments on behalf of the super fund, including a 32.4MW waste-to-energy asset in Norway and a senior secured bond issued by Aunor, a mature shadow toll road in Spain.

“Alternative asset classes have played a significant role in Prime Super’s positive returns, particularly infrastructure and property,” said Primer Super, when announcing its 2016 results.

For the three years to December 2016, Prime Super’s ‘Alternatives Investment’ option generated a 13.96 percent return. This option comprises a target 45.5 percent allocation to infrastructure assets, and some 24.5 percent to credit opportunities, according to the fund’s website.

Its default investment option, ‘MySuper’, reported a 9.28 percent return in 2016. The option has a target allocation of 6.5 percent to infrastructure.

“The change in approach and restructuring of the portfolio around seven years ago is delivering strong risk-adjusted returns. And while the strong returns are pleasing, we are particularly happy with our very strong risk-adjusted returns achieved with lower levels of volatility than most of our peers,” said Baird.

He also described the macroeconomic outlook as “uncertain”, owing to the populist surge witnessed in a number of developed countries and further changes of leaderships likely as other nations go to the polls.

“Interest rates of most major central banks in the world are the lowest in living memory which has in turn increased valuations of all asset classes, some considerably,” he added, explaining that challenging market conditions have resulted in some divestment activity and asset allocation adjustments in recent years.