Mano Mohankumar

Australian super funds’ home bias could further diminish as industry and retail funds look to invest more overseas, particularly in unlisted assets classes such as infrastructure and private equity, according to research house Chant West.

Mano Mohankumar, senior investment research manager with Chant West, says many super funds already have meaningful allocations to unlisted assets, and increasingly, funds are looking to invest more overseas where the investment opportunity set is broader. However, domestic investments will still remain an important part of super funds’ portfolios.

“We’ve also seen funds reshape exposures within asset classes such as shifting allocations from traditional core infrastructure assets to emerging sectors such as digital infrastructure and energy transition investments, which is a theme that is likely to continue,” Mr Mohankumar said.

“Over the past decade, funds have increased allocations to international shares and unlisted assets such as unlisted infrastructure, private equity, and private debt, with the bias to Australian assets slowly falling over time.

“Unlisted infrastructure and other unlisted assets are key components of most super fund portfolios, providing an important source of value-add and diversification benefits which help provide members with a smoother return journey,” he said.

Zenith head of research Grant Kennaway says the demand for clearer disclosure on managed fund and super fund fees and portfolio holdings has never been greater, which is positive for investors.

“Introducing regulated transparency allows research providers to deliver more valuable and effective insights to investors,” Mr Kennaway said.

“Greater visibility into portfolio composition strengthens confidence in investment decisions and provides a more open and accountable market as Australia’s super system continues to expand in both size and scale.

“With increasing competition among fund managers, we are witnessing downward pressure on fund fees, which is a positive development for investors and super fund members seeking cost-effective investment options.”

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