PRESS RELEASE / 4.12.

14

Contact: Kate Fields

Telephone: (02) 8249 1121
kfields@statestreet.com
www.statestreet.com.au
@StateStreet

State Street Report Forecasts Super Funds Leading the Way towards Increased Appetite for
Alternatives
Direct Loans, Hedge Funds and Infrastructure Likely Priorities for Investment
SYDNEY, 4 December 2014 Australian superannuation funds expect to boost their investments in direct loans,
hedge funds and infrastructure as part of a forecast dramatic increase in exposure to alternatives by global pension
funds over the next three years, according to a new report from State Street.
The report, conducted with the Economist Intelligence Unit, concludes that 86 percent of Australian super funds
surveyed expect their appetite for investment risk to grow between now and 2017, compared to a global figure of 77
percent.
The report surveyed senior executives at 134 funds globally including 26 large Australian super funds and a small
number of Asian based funds.
As Australian funds are chasing increased returns to meet their long-term investment objectives in an environment
of continued uncertainty around global interest rates, they are increasing their risk appetite for alternative
investments.
A new area of activity and interest has also emerged in direct loans, with 69 percent of Australian respondents
saying they expect to increase their activity in the next three years.
Greater allocations to single manager hedge funds are planned by 65 percent of the funds surveyed while 60
percent said they would increase their exposure to infrastructure. Some 58 percent said they would put more money
into real estate and 52 percent said they would allocate more to private equity.

PRESS RELEASE / 4.12.14

Daniel Cheever, head of superannuation sector for State Street in Australia, said: Australias $1.8 trillion super
industry is generally viewed by pension funds globally as a model for efficiency. But like funds everywhere, super
funds are under pressure to deliver returns to meet members retirement income expectations in a low interest rate
environment. To achieve this, they will need to balance the risk reward profile of their growing investments with
improvements in data mining, management and reporting.
The reports findings also highlight the cost pressures super funds are facing and the likelihood they will bring a
higher proportion of their investment portfolios in-house, particularly in asset classes with which they are most
comfortable.
Of the local funds surveyed, 80 percent expect to increase their level of internal management over the next three
years. This is in line with the global trend, which shows 81 percent moving towards greater in-house management.
Some 62 percent said it was a challenge to gain a complete picture of risk-adjusted performance from external
managers while 58 percent said they could not always ensure asset managers interests were aligned with their
own.
In the case of Australian super funds, the cost savings from moving some of their investment management in-house
should translate to lower fees for members which in turn should flow through to higher retirement savings, Mr
Cheever said.
To download the full report, please click here.

About State Street Corporation

State Street Corporation (NYSE: STT) is one of the world's leading providers of financial services to institutional
investors including investment servicing, investment management and investment research and trading. With
US$28.47 trillion in assets under custody and administration and $2.42 trillion* in assets under management as of
September 30, 2014, State Street operates in more than 100 geographic markets worldwide, including the US,
Canada, Europe, the Middle East and Asia. For more information, visit State Streets web site at
www.statestreet.com.

Assets under management include the assets of the SPDR Gold ETF (approximately $30 billion as of September 30, 2014), for which State
Street Global Markets, LLC, an affiliate of SSgA, serves as the distribution agent.