Super funds global exposure exceeds 50%

Australian super funds increase international allocations beyond 50 per cent for the first time, signalling deeper diversification and liquidity focus, major bank research has found.

Australian superannuation funds have boosted their global exposure above 50 per cent for the first time, according to National Australia Bank’s (NAB) latest Super Insights Report 2025, which highlights growing diversification and evolving currency risk strategies across the sector.

The report, based on NAB’s 12th biennial survey, draws on responses from 37 Australian super funds managing a combined A$2.69 trillion—representing more than 80 per cent of total industry assets, excluding self-managed super funds.

As at 30 June 2025, total Australian Prudential and Regulation Authority (APRA) regulated superannuation assets have reached A$3.09 trillion, marking a 24 per cent increase over two years.

The major bank’s report found that international investment allocations have risen from 47.8 per cent in 2023 to 50.9 per cent in 2025, underscoring funds’ ongoing pursuit of diversification and “the best risk-adjusted returns for members.”

Despite challenging market conditions, including inflation levels not seen since the 1970s and rising global bond yields, funds have continued to adapt their investment and currency management strategies.

The report noted a stronger focus on liquidity management and operational resilience, with funds preparing for potential stressed market events.

Larger super funds are also refining their hedge implementation strategies. This includes widening their dealing across multiple time zones and expanding the product suite used to hedge international exposures.

The report observed that funds are targeting higher strategic asset allocation (SAA) levels for foreign exchange exposures than in 2023, with no discernible impact from the Trump administration on FX hedge ratios.

A preference for unlisted assets, particularly international unlisted infrastructure, remains strong, according to the major bank.

At the same time, the increasing role of foreign exchange derivatives in overall liquidity management has prompted funds to diversify their hedge maturity profiles and extend the tenor of some hedges.

Moreover, NAB’s survey has identified artificial intelligence and digitisation as additional themes shaping fund behaviour, with most preferring to remain “on benchmark” in the US technology sector despite valuation concerns.