Super bosses plan China tour to scope investment

Top executives of 30 industry super funds that collectively represent $350 billion under management are planning a study tour of China next year to examine a range of investments in Australia's largest trading partner.

The trip comes as industry super funds, which account for nearly a third of Australia's $1.6 trillion superannuation industry, seek to increase their exposure to overseas markets.

Tom Garcia, the chief executive of the Australian Institute of Superannuation Trustees, said the fact-finding mission was designed to allow funds to make informed investment decisions.

"Super is already the same size as the Australian GDP, there will be a point where the money will have to move overseas, just because of the volume," he told BusinessDay.

Australia's superannuation industry is expected to nearly double to $3 trillion by the end of this decade.

"It is the time to go and really investigate China," Mr Garcia said.

AustralianSuper, which has $65 billion under management, established an Asian advisory committee headed by Bernie Fraser last year. It seeks to invest about 10 per cent of its funds in Asia by 2016.

Sam Sicilia, the chief investment officer of $13 billion Hostplus super, said the fund has been eyeing the Chinese market for four years and recently made some investments there. "We set about trying to address myths [about the Chinese economy], either confirming them or dispelling them. Because when a board makes decisions on behalf of what it believes rather than facts, you have a sub-optimal outcome," Mr Sicilia said.

The Hostplus board mandated a Shanghai-based American private equity fund, Siguler Guff, to invest $100 million in Chinese companies that were about to be listed on stock exchanges.

But the board was not comfortable with the proposed investment in Chinese retail projects and proposals were shelved.

Mr Sicilia is upbeat on China but acknowledged there were risks linked with the country. The key is to "invest selectively and one project first," he said. "Rushing to any jurisdictions you don't understand is fraught with dangers."