Why super funds should be looking at US data centres

Australia’s superannuation funds have traditionally favoured local assets like office towers and toll roads to fill out their allocation to alternative real estate.

- Tom Wickenden, Betashares

However, with the digital economy’s growth and increasing online storage needs, data centres are emerging as a new frontier for institutional capital.

Data centres are the engine room of the digital economy, storing, processing and distributing the information that underpins cloud computing, streaming and AI. While Australia’s industry is relatively nascent, with about 300 data centres online, the US has over 5000 sites powering the lion's share of the global online ecosystem.

They are critical infrastructure providing diversification, dependable income and scalable growth. The question is no longer whether data centres belong in a modern portfolio, but why Australian super funds should be looking to the US for their next allocation.

For funds focused on long-term returns, diversification is one of the most effective tools for managing risk. US data centres provide exposure to distinct return drivers such as digital economy demand, power grid constraints and long dated, contracted income - factors that move independently of office, retail or logistics markets. This uncorrelated profile is valuable for super funds navigating Your Future, Your Super performance tests and aiming to smooth outcomes through cycles.