Orchard Funds Management, formerly SAITeysMcMahon, is on the verge of launching a fund that invests in social infrastructure, which it believes can deliver similar returns to traditional direct property, but with less volatility.
Social infrastructure invests in property assets that are fundamental to the needs of the wider community, such as childcare centres, schools, hospitals, aged care facilities and police stations.
According to Orchard general manager of distribution, key accounts, John Ntatsopoulos, the benefits of investing in social infrastructure is that it has low correlation to other asset classes, longer average leases than traditional property and it provides diversification benefits to the traditional property sector.
“Social infrastructure is a growing asset class,” Ntatsopoulos said.
“[For example,] the retirement village industry is a growing industry — the rationalisation and growth of this industry is seeing it become more professional, and that is why we are getting into it.”
Speaking at Professional Investment Services’ annual conference, he explained that the growth of the social infrastructure sector was underpinned by demographic and social changes, and that there were opportunities to consider both in Australia and overseas in terms of assets.
Orchard’s Social Infrastructure Fund is being launched as an existing fund with $24 million in assets, and will initially be released as an unlisted property fund with the potential to list on the Australian Stock Exchange.
The fund’s current asset allocation is in aged care (18 per cent), healthcare (60 per cent) and childcare (22 per cent).
