Australia’s top 10 industry superannuation funds have widened their market dominance in the sector as industry consolidation – coupled with organic growth – has prompted the emergence of a new leader board.
The latest Tria Investment Partners Industry Fund Review shows the top 10 funds account for more than two thirds of total Industry Fund assets under management, and growing.
“The big are getting bigger, applying pressure on trustees of the smaller Industry Funds (IFs) to shore up their respective future positions via growth or consolidation,” said Tria Investment Partners managing partner Andrew Baker.
Overall, the Industry Fund segment grew by 17 per cent in the year to June 30, 2010 – thanks largely to a return to positive investment returns and continued strong net inflows. The only superannuation sector to outpace this growth was the self-managed category which continues it remarkable growth.
“For industry funds, it was the combination of strengthened investment returns and strong net inflows that delivered a healthy growth environment across the sector,” Mr. Baker said.
But it was off-market merger activity that has proven most potent.
“The 2010/11 Industry Fund Review confirms our prediction that the market would continue to segment into the categories of leaders, followers, and the tail. We have seen three funds out of the eleven in the followers category (EquipSuper, Health Super and Westscheme) announce consolidations in the past year,” Mr Baker said.
Of the leaders, the largest, AustralianSuper, grew its market share to 15.1 per cent (up from 14.9 per cent the previous year) to June 30 2010. More recently, AustralianSuper has announced its intention to merge with WA-based Westscheme, a move which will further entrench market dynamics while creating a $40 Billion market leader.