Two ‘mega funds’ expected to reach $1t in AUM

Australian Super and Australian Retirement Trust (ART) are expected to dominate the superannaution market over the next 10 years, according to KPMG, swelling to $1 trillion each.

In its latest Super Insights report, the firm said, excluding any other mergers, both funds were likely to grow their assets under management from around $200 billion in 2021 to $1 trillion by 2040.

Aware Super was likely to grow to $600 billion while Insignia could grow to $500 billion, both up from less than $200 billion in 2021.

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KPMG said: “Under these projections, a small number of large ‘mega funds’ will continue to pull away from the rest of the population. However, in practice, multiple drivers – future consolidations, individual funds’ levels of success in attraction and retention of members, particularly in the retirement space – will impact how the market shifts”.

The level of consolidation was likely to continue for the next few years, particularly as the Australian Prudential Regulation Authority was seeking greater power to force funds to merge. There had been two successor fund transfer (SFTs) announced in 2022.