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Super funds embracing insourcing
Two-thirds of Australian superannuation funds expect to bring asset management operations in-house over the next ten years, according to new research analysis released by BNP Paribas Securities Services.
The analysis, undertaken by BNP Paribas Securities Services and the Economist Intelligence Unit and to be published in the upcoming edition of Super Review, points to the insourcing trend extending beyond domestic assets.
"The current phase of insourcing in Australia has seen largely domestic assets taken in-house," the analysis said.
"The next phase will see asset owners with their own fund managers located and trading outside of Australia into Asia and Europe."
It said asset owners had also reported that they saw some benefits in insourcing fixed income — as yields were so low that every basis point off fees was a help.
The analysis pointed to superannuation funds undertaking insourcing in a formalised way with, for example, one major Australian super fund asking CEM Benchmarking of Canada to look at its options with respect to insourcing.
"The consultancy found that every 10 per cent of assets taken in-house led to a four-basis-point reduction in costs by removing asset management profit margins from the equation," it said.
"The next stage was to look at what asset classes could be taken in-house efficiently, looking at costs, ease of implementation and capacity constraints."
The analysis said equities, direct property, and infrastructure headed the list of likely candidates.
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AustralianSuper has reported a 9.52 per cent return for its Balanced super option for the 2024–25 financial year, as markets delivered another year of strong performance despite the complex investing environment.
The profit-to-member super fund’s MySuper default option has returned 9.85 per cent for the financial year 2024–25.
Colonial First State (CFS) has announced solid double-digit returns for its MySuper balanced and growth equivalent funds during the financial year.
The super fund’s Future Saver High Growth option delivered an 11.9 per cent return for the financial year 2024–25, on the back of a diversified portfolio and actively managed investment strategy.
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