Featured content | The role of unlisted assets in SMSF portfolios

Content provided by Hostplus

Unlisted assets, such as infrastructure, property and private equity, have long played an important role in the investment strategies of many large and successful institutional investor’s strategic asset allocations and portfolios. Today, and into the future, we believe these assets can continue to deliver sustainable, risk-adjusted, investment growth as well as play an important diversifying role in complementing the listed asset exposure in your clients’ SMSF portfolios.

Historically there has been very high barriers to entry for SMSF investors to access high quality unlisted investments.

Hostplus Self-Managed Invest (SMI) has changed that.

How can SMSF investors access unlisted assets?  

For most SMSF investors, it’s very difficult to invest directly in quality unlisted assets and even doing so via institutionally offered unlisted trusts and other investment vehicles, often requires a significant level of minimum investment, redemption restrictions and other barriers to investment opportunity. 

In providing listed, market-like liquidity on assets generally inaccessible to retail and SMSF investors, Hostplus SMI provides unique access to a select range of well-performing[1], high-quality investment options, within the safety and security of an APRA-regulated fund. This includes the rare opportunity to share in Hostplus’ industry-leading returns[2] through direct investment via a premium investment menu which can provide SMSF investors access to infrastructure, property and private equity.

Benefits of infrastructure

Infrastructure invests in tangible assets usually not available to SMSF or retail investors. These types of assets are physical structures that provide essential or integral services to a community e.g. transportation, health, education, judicial and correctional (courts, prisons).

Benefits of these assets include:

  • stable income over a long-time period.
  • inflation hedging and protection, with revenue linked to inflation and economic growth.
  • long-term (up to 50+ years) investment ownership and concessions, and
  • monopolistic and high barrier to entry value characteristics.

Direct property

Property is an asset class many people are familiar with and probably one that many SMSF trustees are already invested in. However, accessing unlisted, or direct property, such as, high-quality, institutional-grade, unlisted Australian and international property assets can be challenging.

Well diversified and sustainably managed property portfolios are often spread across the industrial, retail, residential and commercial property sectors – directly or through unlisted property trusts – and backed by best-in-class sustainability programs benchmarked against key industry approved ESG attributes from Green Star, NABERS and GRESB.

These assets can generate income that offers consistent returns through rents from a range of tenants, and capital growth, while allowing SMSFs to diversify their portfolios and help reduce risk, improve the sustainability and predictability of returns and reduce listed market volatility.

Hostplus has invested in unlisted property for many years and today has an extensive portfolio managed by some of the world’s largest and most experienced property investment managers, including ISPT, Charter Hall and Lend Lease, some of which are not generally accessible to SMSF and retail investors.

Benefits of Private Equity 

Private equity broadly relates to investments that are typically not publicly listed, held or traded. As such, they tend to offer lower volatility than publicly traded companies and entities and can offer other benefits, such as diversification and returns uncorrelated with listed market assets.

Private equity has provided institutional funds, such as Hostplus, with alternative sources of returns that have helped to diversify investment portfolios and deliver returns spread over the periods that align well to longer-term, patient capital, investing. In addition, private equity returns can outperform other markets because of the illiquidity premium found with private markets.

However, accessing quality private equity managers, opportunities, and deal flow has proven to be challenging for retail investors, including SMSFs. This includes opportunities to access later stage venture capital/early-stage growth companies, before public investors get a chance to access these high growth companies on the public market through initial public offerings, floats and trade sales.

How can I invest in unlisted assets?  

To learn more about how your clients can enjoy the benefits of investing in quality unlisted assets and other diversified options managed by one of Australia’s largest and long-term well-performed superannuation funds[3], visit website or call us on 1300 350 819 from 8am – 8pm (AEDT).

 

Hostplus Self-Managed Invest (SMI) is issued by Host-Plus Pty Limited ABN 79 008 634 704, AFSL 244392 as trustee for the Hostplus Pooled Superannuation Trust (PST) ABN 13 140 019 340. This information contains general advice only and does not take into account your personal objectives, financial situation or needs. You should consider if this information is appropriate for you in light of your circumstances before acting on it. Please read the Hostplus Self-Managed Invest (SMI) Product Disclosure Statement (PDS), available at www.hostplus.com.au/smi before making a decision about Hostplus SMI. 

[1] According to the SuperRatings Accumulation Fund Crediting Rate Survey – SR50 Balanced (60-76) Index, February 2021, Hostplus Balanced option has ranked in the top three over five to 20-year time periods. Past performance is not a reliable indicator of future performance and should never be the sole factor considered when selecting a superannuation fund.

[2] SuperRatings has awarded Hostplus the ’15-year platinum performance’ rating for 2005-2020.

[3] SuperRatings has awarded Hostplus the ’15-year platinum performance’ rating for 2005-2020.