SJack: The current property strategy is an evolution of the strategy we put in place back in 2011 and the key elements of that were increasing our exposure to retail property, we were at 28 percent, we're not up to 50 odd percent, increase our exposure to international assets and invest directly as opposed to investing in pooled funds...
So the major changes to the portfolio in the last few years have been our increased weight into the retail sector. We were previously at about 28% back in the aftermath of the GFC and we consciously increased our exposure to that sector. Today, it's about 50 odd percent, which is pretty close to the index level.
We've increased our exposure to retail property over the last few years predominantly because it's a sector that, if you look historically, has performed very strongly, particularly in market downturns. So it's a very durable asset class, very consistent income returns, and consistent capital growth. And when we're talking about retail, it's important to note that we're focusing on the large dominant shopping centres, centres like Chadstone, Eastland, Doncaster here in Melbourne, not regional shopping centres or the smaller sub-regional shopping centres, because we have a view that they're the sort of centres that are going to be impacted by the impact of online retailing.
Paul: The direct property strategy has evolved as the fund has become bigger in size, and so the direct strategy is to complement the investments we have in funds. What the direct strategy means is that we're investing directly into real estate assets, meaning we have control of those assets. So the major decisions in relation to those assets we make ourselves, as opposed to in funds, where those decisions are made jointly with a group of other investors in the fund. The direct strategy, at the moment, is at its beginning. We've invested in one asset at the moment, which is the centre Milton Keynes, but the target to be investing now predominantly into the direct strategy around the world.
So the benefit of having a broader global perspective means that we can be investing in different asset classes and different regions when we believe it's right and it makes sense to invest into those regions.
The centre Milton Keynes is an attractive investment for AustralianSuper because it's a dominant shopping centre, which means it dominates its catchment area. It's a centre that is in one of the fastest-growing metro areas within the United Kingdom. It's a centre that also has the potential for evolution over time, so it's a centre that we invest into initially, but we can re-invest into over time as we build out the various elements or perhaps adding a cinema, perhaps adding some medical centre, perhaps adding other elements that create an activity centre which compliments the existing traditional shopping centre.
Jack: The interesting thing with online shopping is what it's doing is really polarizing the performance of shopping centres. So the really good shopping centres are still thriving and what you'll find is a lot of the retailers in those centres, they still need to have their presence and they have a flagship presence in the better shopping centres, where they can run an internet, an online strategy in conjunction with their physical store. So we're finding that the really strong centres are actually benefiting in some respects from online. It's just another channel that can deliver customers into the store.
So over the next few years, we're expecting the portfolio to grow quite substantially as the fund is growing and within that environment we believe we've prepared the groundwork, we've set up mandates, investment management mandates with leading managers in the UK, Europe, North America, and in Australia, to help us develop a direct investment platform. The focus will be, as it's almost exclusively indirect, most of the new investments will be indirect assets. What we mean by indirect is we will own the underlying asset and we make all the fundamental decisions impacting the property.
The other important feature of the strategy, going forward, is a lot more of the investment will be off-shore and that's really a function of the fact that there are only so many opportunities to invest in the sort of assets we like within Australia.