Investment Strategy
HESTA is one of Australia’s largest industry superannuation funds, managing approximately $70 billion in retirement savings for over 1 million members. The fund primarily serves workers in Australia’s health and community services sectors, including nurses, aged care workers, hospital staff, medical practitioners, and community service professionals.
As an industry super fund, HESTA operates on a profit-to-member basis. The fund’s governance includes representation from employer associations and unions in the health and community services sector. HESTA’s membership is predominantly female, approximately 80%, reflecting the demographics of the health workforce. This demographic profile has shaped the fund’s advocacy positions on issues including the gender retirement gap, pay equity, and the impact of career breaks on retirement savings.
HESTA’s default investment option, the Balanced Growth strategy, employs a diversified multi-asset approach spanning Australian and international equities, fixed income, private equity, infrastructure, real estate, and private credit. The fund’s investment strategy is designed to deliver strong long-term returns while managing risk at levels appropriate for a diversified default option.
The fund has been building its internal investment capabilities, bringing more investment management in-house to reduce costs and improve alignment. HESTA’s investment team manages asset allocation, manager selection, and portfolio strategy internally, with external managers used for specific asset classes and strategies.
HESTA is recognized as one of the most active Australian super funds in responsible investment. The fund integrates ESG considerations across its entire portfolio, engages actively with companies on governance and sustainability issues, and has taken public positions on climate change, modern slavery, and corporate governance.
Private Markets Approach
HESTA’s private markets program spans private equity, infrastructure, real estate, and private credit, representing approximately 20% of the Balanced Growth option.
In private equity, HESTA commits capital to a diversified portfolio of external buyout, growth equity, and venture funds. The fund has relationships with established GPs across North America, Europe, Asia, and Australia. HESTA evaluates private equity managers on track record consistency, operational value creation, team stability, and responsible investment practices. The fund participates in co-investments to increase private equity exposure at lower blended fees and has been developing its internal co-investment capabilities.
Infrastructure is a meaningful allocation within HESTA’s alternatives portfolio. The fund invests in infrastructure through fund commitments and co-investments, with exposure to sectors including renewable energy, transportation, digital infrastructure, and social infrastructure. HESTA views infrastructure as a source of stable, inflation-linked returns that complement the growth orientation of the equity portfolio.
Real estate investments include Australian and international property exposure through fund commitments and co-investments. The fund’s real estate portfolio spans commercial, industrial, residential, and logistics property.
Private credit has been a growing allocation for HESTA. The fund invests in direct lending, structured credit, and specialty finance strategies through commitments to external managers. These investments provide yield enhancement and portfolio diversification.
HESTA’s approach to private markets places particular emphasis on responsible investment. The fund evaluates all private market managers on their ESG policies, practices, and track record. HESTA expects GP partners to demonstrate genuine integration of ESG considerations into investment decision-making and active ownership activities. The fund has been an active participant in industry initiatives to improve ESG standards in private markets, including through its involvement with the Responsible Investment Association Australasia and international organizations.
Frequently Asked Questions
How much does HESTA allocate to alternative investments?
HESTA allocates approximately 20% of its default Balanced Growth option to alternative investments, including private equity, infrastructure, real estate, and private credit. The fund has been building its private markets allocation as part of a strategy to improve long-term risk-adjusted returns for members. HESTA's alternatives program spans global buyout, growth equity, infrastructure, and property strategies.
What is HESTA's focus as a superannuation fund?
HESTA primarily serves workers in Australia's health and community services sectors, including nurses, aged care workers, medical professionals, and social service employees. The fund has approximately 1 million members and is one of the largest industry super funds in Australia. HESTA's membership is predominantly female, reflecting the demographics of the health and community services workforce. This has influenced the fund's advocacy work on issues including the gender pay gap and retirement outcomes for women.
How can fund managers engage with HESTA?
HESTA's investment team manages private market allocations from Melbourne. GPs can approach the team directly or through investment consultants that work with the fund. HESTA evaluates managers on track record, strategy differentiation, team quality, alignment of interests, and responsible investment practices. The fund places significant emphasis on ESG integration and active ownership, and expects GP partners to demonstrate meaningful commitments to responsible investment.
