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Will AustralianSuper be the first ‘mega fund’?

Lachlan Maddock
— 1 minute read

Australia’s biggest super fund got even bigger through the worst recession in a hundred years, reaping the benefits of an advertising blitz and its decision to in-house investment management.

AustralianSuper now has assets under management (AUM) in the order of $200 billion, a milestone that chief executive Ian Silk believes was achieved through the decision to in-house investment management – a move that saved members some $200 million in the last year. 

“The milestone reflects AustralianSuper’s ability to use size and scale to provide strong long-term financial returns while also driving down costs for members,” Mr Silk said, adding that a record number of more than 400,000 people joined the fund in the last financial year. 

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The figure is a massive increase from just six months ago, when AustralianSuper was sitting on $172 billion in AUM. Another key driver of that growth has been a multimillion-dollar advertising blitz, the specifics of which AustralianSuper has so far refused to divulge, warning that doing so would not be in the best interests of members. 

“The reason we have declined to provide the kind of detail you (standing committee chair Tim Wilson) have sought here is because to do so would be to the detriment of the fund’s members,” Mr Silk told the standing committee on economics. 

“It’s a competitive industry. Funds advertise to retain and attract members…in AustralianSuper’s case, why we advertise is because the fund’s size and scale and how we deploy that size and scale is a key characteristic of how we provide what we think is a good service to members.”

The announcement also means Australia is getting closer to having its first mega fund, though what actually constitutes one remains a matter of debate. Multinational financial services group SS&C believes that the first fund to reach $200 billion would be worthy of the moniker, while IOOF CEO Renato Mota anticipated that such mega funds would hit $500 billion in AUM, with $200-$300 billion sitting at the lower end of the scale.

 

Will AustralianSuper be the first ‘mega fund’?
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