November 2019 investment update

01 November 2019

LGS manages more than $12 billion in retirement savings and invests this money in a wide range of different assets including Australian and international shares, property, infrastructure, private equity, fixed interest and absolute return assets.

 
LGS is committed to a responsible investment strategy and our aim is to enhance the retirement income of our members by earning long-term sustainable returns.

This update provides an insight into some of our different investments and recent developments across our portfolio.

Visit our performance pages for details of our latest performance results.

LGS Australian shares

LGS invests in a company called Cleanaway Waste Management. It is Australia’s largest total waste management company involved in collecting, processing, treating, recycling and safely disposing of any type of waste.

During the quarter, Cleanaway in a joint venture with ResourceCo, opened a waste fuel plant in Wetherill Park, Sydney. This plant takes non-recyclable waste that would otherwise go to landfill and converts it to fuel or an energy source. This fuel can be used as a substitute for fossil fuels in both Australian and offshore markets in the production of cement.

The plant will predominantly supply Boral, Australia’s largest construction material company, with fuel for its Berrima cement kiln as a substitute for coal. The remainder will be exported to Asia.

The new plant will replace over 100,000 tonnes of coal usage per annum and take the equivalent of 20,000 cars off the road in terms of greenhouse gas emissions.

LGS direct property portfolio

Local Government Property Fund (LGPF) delivered a return of 11.7% over the year to September 2019. The portfolio outperformed the benchmark by 4.69% over this period.

As at 30 
September 2019
1 Month3 Months1 Year2 Years3 Years5 Years
 LGPF  2.27%  3.14%  11.70%  15.34%  17.12%  17.13%
 Benchmark *  0.79%  1.46%  7.01%  9.37%  10.55%  11.21%
 Excess return  1.48%  1.68%  4.69%  5.97%  6.57%  5.92%

Source: JP Morgan Custody Report / * Mercer/IPD Australian Property Pooled Fund Index / 4.10 Property

Leichhardt SOLAR

LMMarketPlace Leichhardt located in Sydney’s popular Inner West, recently completed the first stage of its new rooftop solar PV system, which also doubles as a shade structure for customers’ cars. The system which incorporates over 1,000 solar panels has the ability to harvest approximately 310kW of energy from the sun.

This investment means that LGS will be able to power around 30% of the Centre using on-site renewable energy, reducing our carbon footprint and avoiding approximately 379 tonnes of CO2 emissions per year.

The reduction in energy demand means that the property is highly efficient, delivering members additional revenue streams and higher values from reduced operating costs.

MarketPlace Leichhardt is a Carbon Neutral Building as certified by the Australian Government. 

SDG13The investment predominantly meets:

United Nations Sustainable Development Goal 13
Climate Action

LGS alternatives portfolio

Overall Portfolio Performance
As at 30 September 2019
1 Year2 Years3 Years5 Years
Private Equity 7.03% 13.33% 13.92% 13.24%
Opportunistic Alternatives 4.59% 6.01% 7.35% 5.46%
Defensive Alternatives 11.56% 10.16% 9.68% 12.37%

Source: JP Morgan Custody Report

LGS invests in ‘Alternatives’ which include private equity, debt and infrastructure. These investments earn long term stable returns which are more insulated from market volatility.

Private Equity

GoGet is Australia’s leading car share provider operating in Sydney, Melbourne, Brisbane, Adelaide and Canberra. LGS invests in the company which has a sustainable market leading position. 

One GoGet car removes 10 privately owned cars from the road and leads to positive impact on traffic and the environment. This statistic is backed by studies both in Australia and globally and align with the experience of city planners and local councils.

Our investment in GoGet contributes to cleaner air and a smaller carbon footprint.

SDG11The investment predominantly meets:

United Nations Sustainable Development Goal 11
Sustainable Cities and Communities

Opportunistic Alternatives

One of our Alternatives managers is a global leader headquartered in New York with over USD$39 billion invested across credit, real estate and other strategies.

Whilst the manager has always focussed on ESG components since formation, recent times have led to a more formalised and structured focus on Environmental, Safety and Health, Human Resources, Legal & Compliance issues at investee companies.

Their ESG process utilises best in class technological tools to provide consistent execution of programs that help to achieve goals. For example, drone technology can add significant value to the ESG program by providing a new set of eyes in data collection. By being used both prior and after the acquisition phase of deals, drone technology helps monitor pollution, emissions, natural disasters and the maintenance of buildings at a fraction of the cost.

SDG09The investment predominantly meets:

United Nations Sustainable Development Goal 9
Industry, Innovation and Infrastructure

Defensive Alternatives

LGS invests in the Utilities Trust of Australia (UTA). The UTA fund owns a globally diversified portfolio of quality infrastructure assets with more than $6 billion of assets under management.

The Sydney Desalination Plant uses a process of ‘reverse osmosis’ to desalinate seawater, and produce high quality drinking water for Sydney when required. The plant can produce an average of 250 million litres per day of drinking water for up to 1.5 million people. This equates to filling more than 100 Olympic swimming pools per day and equivalent to 15% of Sydney’s total drinking water supplies.

SDG06The investment predominantly meets:

United Nations Sustainable Development Goal 6
Clean Water and Sanitation


Sydney Desalination Plant, an asset of the UTA Fund

goals

United Nations Sustainable Development Goals (UNSDG’s) are a set of 17 aspirational goals developed by the United Nations to end poverty, protect the planet and ensure all people enjoy peace and prosperity.  The goals tackle areas including climate change, economic inequality, innovation and sustainable consumption.  LGS’ portfolio investments directly meet these goals and contribute to our impact footprint.

The information on this website is of a general nature only and does not take into account your personal objectives, situation or needs. You should consider obtaining professional financial, taxation and or legal advice tailored to your personal circumstances prior to making any financial decision.