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Pension Funds to Buy More Infrastructure on Energy Transition

(Bloomberg) —

Pension funds around the world are significantly underinvested in infrastructure and will help drive growth as they tip more capital into assets that will be part of the global energy transition, according to a report by IFM Investors. 

The path to cleaner fuels provides a “massive opportunity” for investors as more than A$100 trillion ($65 trillion) will be needed over the next three decades to restructure the economy, said IFM’s chief strategy officer Luba Nikulina in the report from the Melbourne-based global infrastructure firm. Private-sector pensions globally need to increase investment in infrastructure from 2% currently to get to their 5% target, while Australia’s superannuation funds require an increase from 7% to the aim of 10%, the report showed, citing Preqin Global data.

“It is evolving globally as a standalone asset class,” she said in the report. “As interest in infrastructure increases across the globe, the time has come to consider it as equally vital to the performance of institutional investors’ portfolios as those more traditional asset classes.”

Ports, energy transmission infrastructure and train stations are being added to infrastructure portfolios in addition to more traditional core assets like airports, Nikulina said. Broadening the definition of infrastructure to include these provides an “additional universe of opportunities” that can give investors a cushion during market cycles.

Alberta Investment Management Corp., one of the largest Canadian institutional investors, is increasing exposure in Asia by tapping infrastructure assets, the firm’s head of Singapore said on Tuesday.

© 2024 Bloomberg L.P.


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