Australia’s largest superannuation fund has announced it is targeting $1 trillion in assets by 2035, up from its current size of $400 billion.
In an investment update, the fund said it currently has $400 billion in assets under management and wants to increase this to $500 billion by 2030. Looking further ahead, it wants to have $1 trillion by 2035.
The current superannuation system is $4.3 trillion in size, making it the fourth-largest globally – and set to grow to become the second-largest pension market in the world at $8 trillion by 2035, surpassing the UK and Canada.
Commenting on the growth of the fund, AustralianSuper’s head of investment strategy John Normand said the need for scale had required stronger internal investment capabilities.
“Signs may point to brighter skies of growth ahead but the disruption and vulnerability weathered by the global economy in 2025 has underscored how quickly markets can move, and the value of prudent diversification and international exposure for Australian Super as we build the retirement savings of more than 3.6 million members.
“For a fund of this scale, capturing diversification and identifying the best investment opportunities that deliver returns for members, particularly in an environment where usual business practice no longer applies, requires internal capabilities and strong partnerships across the globe.”
For example, he said AustralianSuper had already begun rebalancing towards more defensive markets as the AI theme matures, ensuring its asset allocation remains aligned with economic conditions, valuations and growth opportunities.
Meanwhile, the fund has warned short-term shocks such as a credit event could undermine growth momentum in 2026. This could include further credit events on the heels of First Brands and Tricolor Auto Group and a reversal in AI sentiment with the US being “particularly vulnerable” in these scenarios.
Head of macroeconomic research David Page said the world economy had moved past “peak vulnerability”, a period marked by the US government shutdown and weaker Chinese demand, but stressed that investors should not underestimate the potential for sudden credit events or a shift in sentiment towards AI-linked investments.
Normand addressed mounting debate over whether the rapid rise of AI-exposed equities resembled a bubble.
He said history showed that innovation waves—from the Industrial Revolution to the internet era—often produced powerful sharemarket gains, some of which lasted and others that ultimately collapsed.
Normand said innovation had consistently driven productivity, economic growth and corporate profits, even if the timing and magnitude of gains were exceptionally difficult to forecast.
He added that valuations and debt levels across the tech sector did not currently resemble past bubble peaks.
With central banks cutting or pausing after a year of easing, he said tighter monetary conditions (the typical trigger for bursting bubbles) were not in play.
“AI doesn’t look like a bubble now,” Normand said, though he stressed the fund was monitoring leverage, valuations and monetary settings for any signs of excess.
Economic forecast
Going into 2026, Page pointed to an improving backdrop for international trade after a volatile year in US-China relations. The October truce struck after talks between Presidents Trump and Xi had helped restore calm, and Page said recent moves such as lowering tariffs for Switzerland suggested Washington may be shifting towards less confrontational trade tactics amid domestic pressure over cost-of-living increases.
But he warned tariff policy could be upended early next year if the Supreme Court alters the current framework.
Political cycles in major economies are also expected to shape next year’s growth profile. Page said the Trump Administration was likely to take a steadier approach ahead of next November’s midterm elections, while China’s first year of its 15th Five-Year Plan should traditionally support growth despite the challenges of deflation and demographic pressures.
Domestic conditions have become more supportive, with tight post-pandemic monetary settings easing and real wages rising.
Page said wealth effects, through higher sharemarkets and house prices, were lifting household spending, while strong AI-driven investment and firmer corporate earnings were set to encourage further capital expenditure.
Early signs of a rebound in non-tech investment were visible across the US, Japan and Germany, he said, with German fiscal spending expected to create broader Eurozone momentum.
But Page also highlighted capacity constraints across major economies, warning they could limit how quickly growth can accelerate before inflation risks re-emerge.
The US faces capacity limits from tariffs and tighter immigration rules, Japan is operating near full capacity, and the Eurozone has “little material spare capacity”, he said.
Productivity will determine how fast economies can expand sustainably, though Page expects strong US productivity growth to soften in early 2026. Potential productivity gains from AI appear more likely from 2027.
Financial conditions remain loose, and Page said the scope for rate cuts was limited. Any rise in longer-term bond yields would challenge the fiscal outlook of several major economies.
Page added that the US was expected to retain fiscal stability in the medium term, while Germany’s rising expenditure carried risks for its day-to-day budget, while higher borrowing costs across Europe were also set to filter through more clearly.
