Hostplus ups allocation to infrastructure

Hostplus has adjusted its strategic asset allocation (SAA), making a move away from sovereign bonds and cash and towards infrastructure and direct property.

Following a board meeting last Thursday, the decision was made to increase the fund's allocation to infrastructure from 8 per cent to 10 per cent, according to Hostplus chief investment officer Sam Sicilia. In addition, the allocation to direct property was increased from 13 per cent to 15 per cent, he said.

The changes would come at the expense of sovereign bonds and cash, Sicilia said.

"We think that unlisted, income-producing assets [such as infrastructure and direct property] have defensive characteristics. We don't like bonds," Sicilia said.

The yields on bonds were low, and there were better opportunities elsewhere, he added.

"Hostplus has a relatively young member base (one million members with an average age of 26) so we don't actually need the defensive characteristics of bonds - we get them in infrastructure and direct property," Sicilia said.

Because Hostplus is a $10 billion fund, a 4 per cent change to its SAA could potentially mean a $400 million change in its investments. However, Sicilia was quick to add that the changes to the fund's SAA would not equate to money flowing immediately.

"It doesn't mean we're going to invest that amount - it just gives us the ability to do so," he said.