July 2020 investment update

21 July 2020

LGS manages more than $11 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 investment returns.

LGS certified carbon neutral

climate active logo

LGS is committed to demonstrating leadership in responsible investing both in Australia and globally. Our super fund is now certified carbon neutral under the Australian Government’s Climate Active Carbon Neutral Standard. This means we are achieving net zero carbon dioxide emissions by either carbon removal or carbon offsetting.

LGS purchases offsets that support a NSW-based reforestation project. We are helping to plant native biodiverse forests (equating to 2,538 trees) that capture carbon emissions and enhance soil and water quality as well as restoring habitat for native wildlife.

We also support a biodiversity reserve called Rimba Raya in Kalimantan, Indonesia. In addition to conservation and climate mitigation, the project provides employment and educational opportunities to the local population. Rimba Raya meets all 17 of the United Nations Sustainable Development Goals.

Read more about LGS' carbon neutral certification.

SDG13The investment predominantly meets:

United Nations Sustainable Development Goal 13
Climate Action

LGS direct property portfolio

Overall Portfolio Performance as at 30 June 2020

Local Government Property Fund (LGPF) vs Benchmark

LGPF delivered a return of 5.55% over the year, outperforming the benchmark by 7.63%.

 1 Month3 Months1 Year2 Years3 Years5 Years
 LGPF  -0.49% -1.49% 5.55% 8.43% 12.14% 16.00%
 Benchmark*  -0.28% -3.82% -2.08% 2.74% 5.92% 8.71%
 Excess return  -0.21% 2.33% 7.63% 5.69% 6.22% 7.29%

Source: J.P. Morgan Custody Report / * Mercer/IPD Australian Property Pooled Fund Index

LGS Retail Tops NABERS Sustainable Portfolios Index 2020

NABERS is a national rating system that measures the environmental performance of Australian buildings including; energy efficiency, water usage, waste management and indoor environment quality.

The NABERS Sustainable Portfolios Index (SPI) provides comparative analysis on where property portfolios stand against their peers and makes it free and easy for the public to see the environmental performance of Australia’s most sustainable property portfolios.

We are proud to report that of the 40 portfolios participating this year, LGS was the top performing shopping centre portfolio for both NABERS Energy and Water ratings. LGS also ranked with the market leaders for the performance of its office portfolio.

 

 
LGS believes that high sustainability performance translates to better investment performance as property assets have lower vacancy, stronger yields, better rents and high quality management. 

In 2019, LGS was the first property portfolio in Australia to achieve carbon neutral certification under Climate Active (formerly NCOS) for all its NABERS rated buildings.

For more details, take a look at the NABERS Sustainable Portfolios Index 2020.

SDG13The investment predominantly meets:

United Nations Sustainable Development Goal 13
Climate action

LGS Alternatives

Overall Portfolio Performance as at 30 June 2020

 1 Year2 Years3 Years5 Years
Private Equity 1.71% 5.46% 8.93% 10.42%
Opportunistic Alternatives -0.41% 2.31% 4.09% 4.78%
Defensive Alternatives 5.09% 7.82% 7.84% 12.07%

Source: JP Morgan Custody Report

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

Private Equity

We measure the impact of our private equity investments using the United Nations Sustainable Development Goals (UNSDGs).

This is done by applying a core UNSDG to each asset of each fund and collating data for an estimated 500 companies in the total private equity portfolio.

unsdgImpacts

Opportunistic alternatives

Through alternative asset manager, Cheyne Capital, LGS contributes to the funding of a regional housebuilder which acquires land and develops high quality, well-designed homes in the west of England. The projects generate a positive social impact by providing housing in a nationally supply-constrained environment.

Many of the successful planning applications contain agreements to benefit the surrounding local communities by contributing to public open spaces, affordable housing, education, highways and town centre improvements.

SDG11The investment predominantly meets:

United Nations Sustainable Development Goal 11
Sustainable Cities and Communities

Defensive alternatives

Through global investment manager, IFM Investors, LGS invests in social infrastructure assets and one example is the Perth CBD law courts. Returns from the Perth District Court complex is not expected to be severely impacted by COVID-19 given revenue is derived from the Department of Justice on an availability basis.

There has been increased use of the recently completed Technical Courts Services project which facilitates remote court sessions via video conferencing.

A District Court Building/Community Legal Centre COVID-19 Operational Group has been established, which meets weekly to discuss the combined response to the COVID-19 crisis.

court

SDG11The investment predominantly meets:

United Nations Sustainable Development Goal 16
Peace, Justice and Strong Institutions

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.