POWERED BY MOMENTUM MEDIA
Super industry will consolidate over the next five years
Over the next five years, the superannuation industry will consolidate into a smaller number of larger funds as a result of member ‘stapling’, the Your Future, Your Super performance test and new regulatory obligations.
Speaking at a FINSIA webinar, Cbus chief investment officer, Kristian Fok, said super funds would need to adjust their business models to focus on performance in order to adapt to increased competition in the market.
“The performance test will [mean] you need to stay above a certain level to stay in the game but actually to continue to succeed you’re going to [need to] attract members in what I think is a more Choice type of environment,” said Fok.
“Although we’re all meant to be pitching for the best risk-adjusted returns, from a business point of view you’re probably going to see slightly different paths that the funds will take over the next five years.”
Some of the directions super funds could take, according to Fok, was lower business costs to manage the performance test, providing funds for specific cohorts of members or providing a fund with an isolated focus on performance.
Georgie Dudley, JANA head of business strategy and innovation, added that default funds may not seek to differentiate their product to the extent that Choice products would.
“The fear of failure and the implications of that failure of the performance test is very significant,” said Dudley.
“The upside is more limited and that might move to a greater differentiation within the choice landscape.”
Recommended for you
Vanguard Super has reported strong returns across most of its investment options, attributed to a “low-cost, index-based approach”.
The fund has achieved double-digit returns amid market volatility, reinforcing the value of long-term investment strategies for its members.
Australian super funds notched a third consecutive year of strong returns, with the median balanced option delivering an estimated 10.1 per cent over the 2024-25 financial year, but an economist has warned that the rally may be harder to sustain as key risks gather pace.
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.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom 465 Calder Road Calder
99.46 3 y p.a(%)
2
DomaCom DFS Mortgage
95.46 3 y p.a(%)
3
Global X 21Shares Bitcoin ETF
78.55 3 y p.a(%)
4
BetaShares Crypto Innovators ETF
50.39 3 y p.a(%)
5
Global X GlobalX FANG+ ETF
47.50 3 y p.a(%)
