IFM wins mandate to manage assets for US pension fund

ONE of the world's biggest pension funds, the California State Teachers' Retirement System (CalSTRS), has tapped the fund manager behind Australia's super industry to manage more than $US500 million ($466 million) worth of infrastructure investments around the world.

By InvestSMART · 8 Feb 2012

By InvestSMART ·
8 Feb 2012

Comments

The Industry Funds Management mandate represents one of the largest single commitments made in infrastructure by an American pension fund given it still remains a relatively new asset class for US funds.

CalSTRS has nearly $US130 billion under management, mostly in global equities and fixed income. The fund has about 852,000 members.

Industry Funds Management (IFM) is owned by Australia's 16 industry superannuation funds.

The public cannot invest directly in IFM. It manages nearly $30 billion in retirement savings on behalf of more than 5 million members of its super fund owners, which include AustralianSuper, MTAA Super and Cbus.

The CalSTRS mandate involves investing in infrastructure assets across North America and Europe. This will be done in two tranches, the first $US300 million will be invested immediately and the second tranche of $US200 million is expected to be invested in the next 18 months.

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

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

He said the investment was based around the model of Australian superannuation funds.

Go to Google News, then click "Follow" button to add us.

Share this article and show your support

Frequently Asked Questions about this Article…

What did CalSTRS announce about its infrastructure investment mandate?

CalSTRS has tapped Industry Funds Management (IFM) to manage more than US$500 million (about $466 million) of infrastructure investments around the world, making it one of the largest single infrastructure commitments by an American pension fund.

Who is Industry Funds Management (IFM) and can everyday investors put money into IFM?

IFM is a fund manager owned by Australia's 16 industry superannuation funds. It manages nearly $30 billion in retirement savings on behalf of more than 5 million members of its super fund owners. The public cannot invest directly in IFM.

How will the US$500 million from CalSTRS be deployed and on what timetable?

The mandate will be invested in two tranches: the first US$300 million will be invested immediately and the second US$200 million is expected to be invested over the next 18 months. Investments will focus on infrastructure assets across North America and Europe.

What types of infrastructure assets will IFM target for the CalSTRS mandate?

The mandate involves a wide range of infrastructure assets, including regulated utilities and transport assets, consistent with IFM's global infrastructure strategy.

Why is CalSTRS investing in infrastructure and how does it relate to inflation?

CalSTRS' chief investment officer, Chris Ailman, said the investment offers an opportunity to partially hedge the pension fund's inflation risk. Infrastructure assets can provide inflation-linked cash flows or pricing structures that help protect purchasing power over time.

How large is CalSTRS and what does it mainly invest in?

CalSTRS manages nearly US$130 billion, with the bulk of its portfolio in global equities and fixed income. The fund serves about 852,000 members.

Why is this IFM mandate noteworthy for US pension funds?

The IFM mandate is notable because infrastructure remains a relatively new asset class for many US funds, and this commitment—over US$500 million—is one of the largest single infrastructure commitments by an American pension fund to date.

Which Australian super funds are connected to IFM through ownership?

IFM is owned by Australia's 16 industry superannuation funds. Its super fund owners include well-known funds such as AustralianSuper, MTAA Super and Cbus, which collectively represent the retirement savings of millions of members.