AMP Capital Investors expects to see strong growth in allocations to Australian alternatives, particular infrastructure, by Japanese and Korean pension plans.
Historically these pension schemes had small investments in alternatives, but they are now looking to expand their exposure over the next three to five years as they continue to grow, and they see Australia as a relatively safe way to access investments and get exposure to growth in China.
"We've had a lot of Japanese pension funds investing this year into our global infrastructure debt fund, because Japanese pension plans have only been tiny investors into alternatives," AMP Capital Investors international chief executive Anthony Fasso said.
"Typically, they did invest in hedge fund of funds but they didn't do much outside of that, so now where they might have had 1 per cent allocation to alternatives in the next three to four years, I expect to see that go to 4 or 5 [per cent]," he said.
Fasso, who is based in Hong Kong, expects to see more investment going into infrastructure assets, infrastructure debt, unlisted real estate and uncorrelated longer dated assets, including forestry investments.
AMP Capital is among the top 10 largest foreign retail fund managers in Japan. It has about $7 billion in funds under management and two of its largest Asian clients are located in Japan.
Fasso said the Japanese economy has recovered well from the recent earthquake and the nuclear disaster following it. He said most parts of the economy were back to normal, while there was optimism about the impact of reconstruction efforts on the economy.
Korean pension plans are also likely to increase their alternative allocation, Fasso said.
"The world's most interesting investor probably resides in Korea, which is the Korean National Pension Service. It is a fund that has $340 billion [in funds under management] and is growing at a net $2 billion a month," he said.
"Historically they have had a very low weighting to alternatives and to overseas asset classes."
"Now that they are such a sheer size. they had to diversify to global asset classes and, on the alternative side where we tend to focus, allocations have gone from 1 per cent three years ago to about 7 to 10 per cent in the next five years."
