How are the Australian Super Funds investing their capital?

Using Q2 2017 data from APRA, we took a fresh look at how Australian superannuation funds have invested their capital over the past 4 years. At 30 June 2017, total assets of Australian superannuation industry grew by $211 billion (10%) to $2,324 billion compared to June 2016. This growth was solely driven by APRA-regulated entities (with more than 4 members) and 62% market share of the entire industry. Within these influential entities, equity remained the most attractive asset class with international-listed equity witnessing significant rise in allocation over time. Allocations to Fixed income and  infrastructure also increased over the period. Elsewhere, Corporate, Industry, Public-sector and Retail funds broadly maintained their market share in the Industry although the underlying asset allocation for Retail segment was most differentiated from the rest of the groups.

Total assets of Australian superannuation industry experienced a quarterly growth of 1.9% and an annual growth of 10%, solely driven by APRA-regulated entities as in Q2 2017.

In June 2017, total assets of Australian superannuation industry increased by $43 billion (1.9%) and $211 billion (10%) to $2,324 billion compared to March 2017 and June 2016, respectively. This growth was solely driven by APRA regulated entities with more than 4 members, which managed $1,442 billion and accounting for more than 60% of the whole industry. This segment experienced a growth of $43 billion (3.1%) from last quarter and $152 billion (11.8%) from last year 

Equity remained the most attractive asset class with international-listed equity overtaking domestic equities as the most popular asset class.

For APRA regulated entities with more than 4 members, equity has remained the most popular asset class, followed by fixed income, and property & infrastructure.

Australian-listed equities on average attracted the largest share of superannuation assets, accounting for more than 24% of the whole segment at 30th September 2013. Since that time however, allocations to Australian shares has gradually declined to 22.8% at 30 June 2017. At the same time, allocations to international listed equity increased from 17% in 2013 to 23% at 30 June 2017, making it the most popular asset class amongst the super funds.

The biggest decline in allocations was witnessed in Unlisted equity. Allocations declined from 12% at June 2013 to only 4% in June 2017 and was lead by Retail super funds. This gradual outflow from unlisted equities coincided with increased allocations to international equities by Retail super funds.

Defensive assets, such as Australian fixed income and international fixed income experienced increased allocations from 12% and 5% to 13% and 7.5%, respectively. In contrast, cash allocations declined from 14.6% to 12.4% over the period.

Allocations to both listed and unlisted infrastructure increased over the period. Similarly, allocations to alternatives (other) was stable at around 4% over the period.

In dollar terms, international listed equity scored the highest annual growth rate of 19% at 30 June 2017, followed by international and Australian listed infrastructure with 18.6% and 17% growth, respectively. Listed property was the worst asset class with annual growth rate of -9.2%.  

 

Corporate, industry, public-sector and retail funds maintained their market share, retail funds allocation diverge

Market shares of Corporate, Industry, Public-sector and Retail super funds remained stable over the period. This stable market share persisted despite divergent asset allocations, particularly for the Retail super funds.

Retail super funds maintained their aggressive allocations to domestic equities (27%) which was well above the industry average of 22.8%. Allocations to international equities by retail funds increased over the period to 22.3% while allocation to unlisted property reduced substantially. This was the most pronounced asset class rotation reported by the retail funds.

Corporate super funds had the most aggressive allocations (26%) to international equities while they had one of the lowest allocations to domestic equities at 19%.

Allocation to listed property also remained above industry average for Retail funds (5.6%) while allocations to Alternative assets of 4% (other) was in line with Corporate, Industry and Public -sector funds.

 

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