Industry funds climb ranks as gap widens with government funds

New research has revealed a significant growth differential and rankings move between industry funds and government-related funds.

The latest Global Top 300 Pension Funds report, compiled by WTW’s Thinking Ahead Institute and Pensions & Investments, has shown that Australia’s presence in the group of the world’s largest pension funds continued to grow in 2023, with 17 local funds now in the top 300.

AustralianSuper remained the only fund in the top 20 and moved up two positions to rank 16th with US$204.63 billion in assets.

The Future Fund was the next Australian fund in this year’s rankings, with the sovereign wealth fund gaining one position to rank 25th with US$144.3 billion in total assets.

Moreover, the research revealed that all but one of the seven Australian funds in the top 100 experienced a material improvement, with another two, Rest and HESTA, sitting just outside the top 100 group.

Aware Super moved up from 41st to 37th position with US$109.93 billion, UniSuper rose from 67th to 58th with US$84.92 billion, and Hostplus jumped from 84th to 80th with US$64.1 billion.

Meanwhile, Cbus, which ranked 99th a year ago, placed in 87th with US$57.0 billion.

Rest came in 103rd with US$51.3 billion in assets, while HESTA moved up to 102nd position with US$51.6 billion, Commonwealth Superannuation Corporation (CSC) fell slightly to 136th position with US$41.3 billion, and State Super slid to 197th with US$28.5 billion.

Western Australia’s government employee super fund GESB ranked 209th, ESSSuper was 234th, and Super SA was 239th.

Equip Super and Spirit Super, both of which joined the ranking last year, moved down slightly to 261st and 296th position, respectively.

“We also have a new entrant to the top 300 being Brighter Super who has entered at position 271 following the merger of Suncorp Super into Brighter Super in June 2023,” said Ellie Boston-Clark, co-head of governance, investments Australia at WTW.

Interestingly, Boston-Clark said, “a significant growth differential and rankings move” between industry funds and government-related funds emerged, with industry funds moving up three positions on average between 2022 and 2023, while government-related funds lost eight positions in the same period.

“This change is partly due to the maturity cycles of these two groups, with government-related funds typically more mature, as well as ongoing merger activities in industry funds continuing to increase their scale,” Boston-Clark said.

“As fund scale and complexity in the investment landscape continues in the coming years, enhancing governance practices will become of increasing importance to funds looking to differentiate their performance.”