Investment
15 September, 2022

Building the foundations of our nation

When most people think of investing, they think of shares and bonds. But to grow and protect your super, we invest in a wide variety of assets such as property, fixed interest, cash, private equity and more. One of the most critical assets we invest in on your behalf is infrastructure. 

What is infrastructure? 

Infrastructure assets are often called "real assets". They include buildings, structures and services we use daily, such as bridges, roads, energy and water providers, hospitals, schools, ports and airports.  

Infrastructure assets are "unlisted" assets, which means they aren't usually bought or sold through an exchange, such as the stock exchange.  

Over the last few decades, industry super funds (including Spirit Super) have invested significantly in Australian infrastructure to help strengthen the economy, create jobs, diversify their portfolios, and support critical infrastructure needs.  

In fact, according to Industry Super Australia's Super in the Economy 2020 report, Industry SuperFunds have invested $49.6 billion in unlisted infrastructure assets as at June 2019, with about $32.2 billion invested in domestic projects.

This means, apart from supporting your retirement, your super plays an integral role in keeping our nation productive, employed, healthy and moving forward.

Why do we invest in infrastructure? 

Infrastructure assets are built to last and are designed for high-volume use. Just think about how many planes arrive and depart from an airport every day or how many people use your nearest highway or toll road. 

The revenue we earn from many infrastructure assets is pegged to inflation. So, when inflation increases, and other assets such as bond perform poorly, infrastructure returns increase. 

This makes infrastructure assets relatively safe investments that can offer stable and predictable long-term investment returns.  

Many infrastructure assets also come with long-term lease arrangements with the government or other private companies. This not only helps your super grow but also buffers our overall portfolio from short-term market fluctuations, such as when share prices rise and fall.  

Finally, infrastructure assets have relatively low operating and maintenance costs and generally don’t have a lot of competition (how many airports are in your state?).  

This makes infrastructure assets great long-term earners for you and your super. 

Benefits beyond returns 

While value and returns are always our focus when investing your retirement savings, we also take a "people first" approach to investment decisions. This means we seek investments that create positive change in our cities, regions and local communities.  

This is where investing in infrastructure can have a profound impact.  

By investing in schools, childcare, hospitals and shopping centres, we can lift our standard of living and offer dignity and opportunities to those who might usually miss out.  

By investing in ports, roads, rail and airports, we can strengthen our supply chains. This keeps goods and people moving and supports local businesses to thrive and grow. It also creates jobs and ensures you can continue buying all the foods, goods and entertainment you're used to.  

By investing in power and water providers, we help keep the lights on and support the transition to a low-carbon economy. This ensures we're investing in a brighter future for us all.  

Importantly, investing in critical infrastructure can ease pressure on the public purse while still ensuring communities  and businesses have access to vital services. This means your hard-earned tax dollars can be used on other essential things like health and education.  

So, the next time you drop your kid off at school, drive down a highway, walk through an airport, or get a package shipped from overseas, just remember, there's a good chance your super helped make it happen. 

The drawbacks 

While infrastructure assets are considered low risk, no investment is risk-free. They also have a few unique drawbacks compared to other investment types.

Given the size and nature of infrastructure assets, they often come with considerable upfront costs. This can put them out of reach for smaller or independent investors, and it can be a while before your investment starts earning profit.  

Infrastructure projects are often partnerships with state and federal governments and can be subject to changing regulatory requirements. This can cause delays or additional costs if not managed correctly.  

As unlisted assets, infrastructure assets also are harder to buy and sell than assets such as shares, cash and bonds. This means they can't be quickly liquidated (converted into cash), so we need to ensure our portfolio is well balanced to avoid cash-flow issues.  

Believe us, if you've ever tried buying or selling an airport, there are a few hoops to jump through before the cheque clears! 

The good news is that we only buy infrastructure assets if we plan to have them for a long time, so the benefits usually outweigh any drawbacks. 

Importantly, infrastructure assets continue to offer excellent value for you and your super while strengthening our communities, the economy, and the prosperity of our nation.  

Now that's something worth investing in.   

 

Impact case study: Flinders Ports 

Overview

Name: Flinders Ports (aka Flinders Port Holdings)
Asset type: Infrastructure, unlisted 
Purchased: 2001 from the South Australian Government

 

About Flinders Port Holdings 

Flinders Port is a privately owned port and logistics services group based in Port Adelaide, South Australia. It owns and operates Flinders Adelaide Container Terminal — the only container terminal facility in South Australia — and six key regional ports in Port Giles, Port Lincoln, Wallaroo, Port Pirie, Klein Point and Thevenard. 

Together these ports handle inbound and outbound cargoes, including grains and seeds, motor vehicles, agricultural commodities, iron ore and general cargo. 

Our stake

Spirit Super owns approximately 20% of Flinders Ports. The company operates under a 99-year lease arrangement, which is set to expire in 2100. 

Economic impact 

Flinders Ports is one of South Australia’s top ten companies, with an annual turnover of more than $200 million. It facilitates the movements of approximately $25 billion of trade per year. This is equivalent to 94% of South Australia’s international trade and 24% of the state’s Gross State Product. 

Employment impact 

Flinders Ports is one of the largest private-sector employers in South Australia. It employs over 700 people and supports 6,000 jobs throughout the state’s regional and rural areas.  

Social impact 

Flinders Ports supports many community organisations, including the South Australian Maritime Museum and Indigenous youth employment programs, in partnership with the Clontarf Foundation. 

Member benefit 

Flinders Port is a high-performing asset that will provide strong, predictable long-term returns for many years. It plays a vital role in supporting local trade and businesses by facilitating the efficient transport of people and goods in and out of South Australia.  

More information 

Go to flindersportholdings.com.au