Super funds off to China in search of prospects

The top executives of 80 industry and retail super funds that collectively represent $350 billion under management are planning a study tour of China next year to examine a range of investments.

The move comes as industry super funds, which account for nearly a third of Australia's $1.6 trillion superannuation industry, are seeking to further raise their exposure to offshore markets.

Tom Garcia, the chief executive of 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 [and] there will be a point where the money will have to move overseas, just because of the volume," he told BusinessDay.

Australia's super 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, the nation's biggest fund, as well as HESTA, First State Super and Hostplus are expected to join the China mission.

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

Sam Sicilia, the chief investment officer of the $13 billion Hostplus super, said the fund has been eyeing China 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," he said. "Because when a board makes decisions on behalf of what it believes rather than facts you have a sub-optimal outcome."

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. However, the board was not comfortable with the proposed investment project in Chinese retail projects. Proposals were shelved.

Mr Sicilia said the key is to "invest selectively and one project first" in China. "Rushing to any jurisdictions you don't understand is fraught with dangers," he said.