The US is the Top Choice for Australian Pension Fund International Investment

With Australian pension funds forecast to invest trillions of dollars in international markets by 2035, the US is emerging as the top investment destination, according to IFM Investors.

New research based on analysis from the Super Members Council and Mandala found that Australian pension fund investment in the US is expected to more than double over the next decade from $40 billion to over $1 trillion.

In particular, Australian funds are looking at opportunities in American infrastructure, with investments across roads, ports and logistics, data centers, energy, and telecommunications expected to increase from $20 billion to $110 billion by 2035.

The report also highlighted an opportunity for greater collaboration between Australian pension funds and the US. This is important because strengthened partnerships could see Australian investments in US private markets surpass $240 billion by 2035.

Australia has one of the largest and fastest-growing pools of retirement savings in the world, with the country’s pension assets totaling approximately $2.8 trillion.

As this capital base has expanded, Australian funds have increasingly turned to international private markets, with overseas investments more than doubling since 2014.

These global investments have outpaced domestic ones, enhancing diversification and boosting returns, according to the report.

Amit Singh, managing partner of Mandala, said: "Australian pension funds have grown beyond just domestic investments to become global players. Our research shows this trend will continue, especially in US private markets and infrastructure like roads and energy, which match well with Australian investors' long-term outlook."