SYDNEY -- Australia's $1.5 trillion in superannuation assets is now the fourth-largest in the world, according to a new study.
It's even bigger than our economy, but sits behind the U.S. with US$16.9 trillion, Japan with US$3.7 trillion and the U.K. with US$2.7 trillion, and just ahead of Canada's US$1.48 trillion in pension fund assets, according to a report by Towers Watson entitled Global Pension Asset Study 2013.
An estimated $60 billion flows into the super pool each year, thanks to compulsory super.
According to the report, more than half of that $1.5 trillion is invested in the stock market, 15% is allocated to bonds, 8% to cash, and 23% to other assets, such as real estate, infrastructure, hedge funds, etc.
Self-managed super funds make up a rapidly growing 30% of that with $460 billion, more than the $387 billion invested through retail funds. The remainder is made up of corporate and industry super funds.
Almost 1 million Australians now invest in around 460,000 self-managed super funds, with the number growing thanks to fund managers' overall inadequate outperformance, and falling markets post the GFC (although in 2012 the Australian market posted a decent 19% return, including dividends).
Many people believe that they can beat the fund managers at their own game, and there's absolutely no reason why they can't.
With 1% to 1.5% of that $1.4 trillion paid as fees, the industry creams off between $14 billion and $20 billion each year, split between fund managers, financial advisors, and other so-called intermediaries. No wonder then that Australia has so many retail super funds, each trying to score a piece of the $1.4 trillion cash cow.
The Foolish bottom line
With more than $750 billion invested in equities, companies associated with the industry like ASX Limited (UNKNOWN:UNKNOWN), Computershare Limited (UNKNOWN:UNKNOWN), Iress Limited (UNKNOWN:UNKNOWN), and IOOF Limited (UNKNOWN:UNKNOWN) should all benefit from the growing pile.
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The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned.