Place for niche funds in post-merger world: Aware Super

As the superannuation industry goes through a period of consolidation, competition is important and smaller niche funds will still have a place in the industry landscape, according to Aware Super. 

Deanne Stewart, Aware Super chief executive, said ultimately it was about good competition which meant between a handful to a dozen large funds competing in the space. 

“I don’t know if I have a particular number in mind but it’s not a couple of hundred and it’s certainly not four [in reference to the big four banks],” Stewart said. 

“There will be room for niche funds that are brilliant or a couple of areas of the value chain or how they actually target a certain type of member base. 

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“They will need to be very differentiated because what they will be up against is large players that will use that scale to both drive down the cost to serve members, so the cost of fees but also provide really good global investment performance.” 

Stewart said the future marketplace would have room for both, but the overall number of funds would definitely be a much smaller number than what it was today. 

“If you look at what do you really need to be a really good super fund into the future, you will absolutely need to provide good performance, low fees, be responsible in the way you manage those assets but also really good governance,” Stewart said. 

“As an industry, we’re really maturing and become far more sophisticated in the way the funds are operating but also in the way they are governed. 

“That governance bit doesn’t come up as often in terms of what makes a good fund but I think that will play out really strongly in time to come.”