Australian pension assets in the US are expected to more than double over the next ten years, from $400 billion to over $1 trillion, according to an analysis by IFM Investors.
According to the report, which is in partnership with the Super Members Council and Mandala, Australian funds have a lot of potential to strengthen their connections with US markets. By 2035, investments in US private markets might reach $240 billion if partnerships improve, with infrastructure spending, which includes telecom, energy, ports, roads, and data centres, increasing from $20 billion to $110 billion.
Australia’s $2.8 trillion pension system is among the largest and fastest-growing globally. As it expands, funds are investing more overseas, especially in private markets, where foreign investments have outpaced domestic ones since 2014, boosting diversification and returns.
In a key move, Nest recently acquired a 10 per cent stake in IFM’s holding company, Industry Super Holdings, joining 16 Australian super funds as co-owners. While the fee was undisclosed, the deal aimed to secure better terms on charges. Nest and IFM are committed to investing in infrastructure, debt, and private equity, with a focus on UK opportunities. Nest set a goal to increase private market allocations to 30 per cent, targeting £5bn in investments through IFM by 2030.
Meanwhile, IFM Investors has invested in US infrastructure projects such as The Indiana Toll Road, Switch Inc., Swift Current Energy, and Freeport LNG since 2007.
IFM Investors global head of external relations David Whiteley says: “Australia has built one of the world’s most successful pension systems, with the country’s pension assets totalling approximately $2.8 trillion US dollars. We already have a significant footprint in the US but now is the right time to invest more.”
“Based on existing trends, Australian pension funds are forecast to have over $2.6 trillion US dollars invested outside Australia by 2035. Investing in international markets helps to diversify portfolios and deliver healthy returns for Australian workers.”
Super Members Council executive general manager strategy and insights Matt Linden says: “Such is the size and scale of Australia’s pension funds they need to scour the globe to find the best investment deals that will deliver their members a retirement they can look forward to.”
“There is a great opportunity to unlock further investment opportunities for Australian super fund members in the US – the world’s largest market. And in a win-win the US economy benefits from Australian pension fund investments strengthening and growing their businesses.”
Mandala managing partner Amit Singh: “Our analysis shows that Australian pension funds are becoming major global investors, with investments in the US alone expected to reach $1 trillion by 2035.”
“Australian pension funds have grown beyond just domestic investments to become global players. Our research shows this trend will continue, especially in US private markets and infrastructure like roads and energy, which match well with Australian investors’ long-term outlook.”
