Australia’s superannuation funds have nearly the highest proportion of internal asset management in the world, but there’s plenty of questions hanging over the practice even as funds push into more expensive niche asset classes.
The retirement chief of the $335 billion AustralianSuper, who was “instrumental” in delivering a slew of member experience uplifts across a 17-year stint with the fund, will leave this month to establish a new venture.
Super funds back Nuveen’s US real estate play
Nuveen has won $190 million from super funds including Cbus, Hostplus and TWUSuper for its US Cities Workplace Strategy, which was started in early 2021 with an initial investment from its parent company TIAA and invests in “alternative workplace assets” across medical office, life science and technology R&D.
“The strategy was positioned away from traditional, big box, billion dollar office buildings in large metropolitan areas and looking to capture some of those thematics relating to an aging population and the way people work,” says Andrew Kleinig (pictured), Nuveen managing director and head of Australia. “It was going a little deeper.”
“(These assets) haven’t really been available for access in the domestic market at scale; there was peripheral interest and then with Covid and more of that change to different kinds of working environment and the healthcare thematic, it was trying to access some of those themes with the understanding that there wasn’t the depth of opportunities in the Australian marketplace.”
Other investors in the strategy include US pension funds, as well as small allocations from the Nordics and Japan. Hostplus and TWUSuper were advised by JANA, with the asset consultant “noting the diversification benefits of investing in sectors not readily available in the Australian market”. Kleinig and Nuveen anticipate that the allocations might grow over time.
“It’s a sub-sector within the real estate space that super funds haven’t had a material exposure to, so it’s a bit of measured step in with knowledge transfer and then the possibility of growing allocations over time,” Kleinig says.
“Speaking from how I’ve seen the market, the desire we’ve found from the super funds has been to, if it’s possible and it’s a compelling investment opportunity at scale, then domestic presents an opportunity for them to allocate to a new asset class or sub-sector first. It was really that the US has such a developed market in these sub-sectors, we’d even say beyond the UK where there’s the Oxford-Cambridge-London ‘Golden Triangle’ for life sciences.”
