Aussie Super Fourth-Largest in the World

Superannuation assets reach more than $1.5 trillion.

Motley Fool Staff
Mike King
Feb 12, 2013 at 8:49AM
Consumer Goods

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 (ASX:ASX), Computershare Limited (ASX:CPU), Iress Limited (ASX:IRE), and IOOF Limited (ASX:IFL) should all benefit from the growing pile.

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