Market insights: Your infrastructure questions

Members were keen to know if QSuper would be seeking infrastructure ‘bargains’ given current market volatility. As a liquid fund (with around 28% currently held in cash or equivalents), QSuper is well placed to respond to opportunities that arise in times of market disruption. During the 2008 global financial crisis, we acquired some very strong unlisted assets, including New York’s One Times Square and Heathrow Airport. Ms Kumaru confirmed QSuper would be looking to acquire more infrastructure assets at appropriate prices.

Many members asked about Heathrow, an iconic asset in QSuper's investment portfolio. This year, two events – a UK Court of Appeal decision that reduced the probability of a third runway going ahead, and COVID-19 – have impacted actual and forecast passenger traffic at Heathrow.

Given the significance of these events, QSuper’s Valuation Review Panel conducted an interim revaluation of Heathrow, which is reflected in current unit prices. It is worth noting, however, that decisive action in the early stages of the pandemic means that the airport’s financial position remains robust, with enough liquidity to maintain the business over the next 12 months, even with no passengers at all.

Another matter of interest for members was news that Queensland Investment Corporation (QIC) was considering taking a stake in Virgin Airlines on behalf of the Queensland Government.

Ms Kumaru noted that QSuper is not a Queensland Government entity and confirmed that members’ money was not involved in this potential acquisition. While QIC is one of QSuper’s investment managers, the Virgin acquisition is a private equity asset, which was not being pursued by QSuper’s private equity manager, Partners Group.

Ms Kumaru explained QSuper has investment in shopping centre assets and she has observed a notable shift in buying behaviour in recent years, with more consumers making their purchases online. COVID-19 has arguably expedited this trend, impacting shopping mall valuations.

It’s our view that shopping centres are not dead, but their use is changing. Understanding exactly how this will play out across the real estate sector, and what that means for our overall portfolio, is an ongoing priority.

Climate change is an issue that the QSuper board takes seriously. In response to member questions, Ms Kumaru confirmed that QSuper does hold renewable assets, including the independent power producer Vena Energy, and if more become available that were appropriately priced and likely to deliver good risk-adjusted returns, we would pursue them.

We also hold some natural gas assets, which were themselves looking to diversify into renewables. For more information on socially responsible investment options, read here.