California fund entrusts $500m to Australian manager

ONE of the world's biggest pension funds, the California State Teachers Retirement System, has chosen the fund manager behind Australia's industry funds to manage more than $US500 million worth of infrastructure investments around the world.

ONE of the world's biggest pension funds, the California State Teachers Retirement System, has chosen the fund manager behind Australia's industry funds to manage more than $US500 million worth of infrastructure investments around the world.

Industry Funds Management's mandate is one of the largest commitments in infrastructure by a US pension fund, given that infrastructure is still a relatively new asset class there.

CalSTRS has nearly $US130 billion invested, mostly tied up in global equities and fixed income. It has some 852,000 members.

Industry Funds Management is owned by Australia's 16 industry superannuation funds, which in turn manage nearly $30 billion in retirement savings of more than 5 million members.

The CalSTRS mandate involves investing in infrastructure assets across North America and Europe. The $US500 million will be invested in two tranches, the first $US300 million to be invested immediately. The second is expected to be invested within 18 months.

The mandate involves investing in a wide range of infrastructure assets, such as regulated utilities and transport.

CalSTRS chief investment officer Chris Ailman said the investment marked an opportunity for the US pension fund to partially hedge its inflation risk through infrastructure.

He said the investment would be based on the model of Australian superannuation funds that "have pioneered this sector".

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