POWERED BY MOMENTUM MEDIA
Still room for super fund consolidation
The consolidation of superannuation funds will be ultimately good for the industry as there are still a number of underperforming funds which will need to find new homes, according to chief executive at Equip and Catholic Super, Scott Cameron.
Following the announcement from Catholic Super that there would be up to 20% in reductions in investment fee for its members, Cameron said that, at the same time, there were a number of smaller super funds in the industry which would be unable to remain competitive.
“I think consolidation ultimately will be good for the industry and some of those underperforming funds will need to probably find new homes but I also think that it needs players that can differentiate themselves and we certainly see that as an opportunity for us to be a differentiator in that medium size but scalable fund of around $50 billion [in funds under management],” he said.
“We are currently around $30 billion in funds under management (FUM) and we do have aspirations to get larger than that. We have a target by 2025 getting to $50 billion in FUM so we are looking at the inorganic growth opportunities over that period of time and that would allow us to get greater scale benefits.”
Cameron also stressed that super funds dealt with the great compliance regulation across the industry and a lot of these efficiencies would need to be spent on investment in those areas.
Speaking on the potential acquisition targets, he said there was no ‘one size fits all’ solution and there would be a number of factors at play, including the potential fund’s capability, market presence, size or even its geographical spread.
“You just need to look at the number of factors that benefit the both member cohorts.”
The recently-announced falling fees for all Catholic Super members were the result of the fact that joint venture between Equip and Catholic Super had been legally finalised and, following this, a result of efficiencies and scale achieved by aligning the investments of Catholic Super and Equip.
According to the funds, the joint venture enabled immediate savings by leveraging a larger investment pool, instituting a single executive team and a range of administrative efficiencies.
The legal successor fund transfer would be the culmination of the Equip and Catholic Super joint venture and the final legal step that would align the investments of the funds.
The success fund transfer would allow the fund over the next six to 12 months to negotiate with a lot of investment managers where the investments would become a part of one pool of investments with better outcomes due to the efficiencies, Cameron said.
Recommended for you
Jim Chalmers has defended changes to the Future Fund’s mandate, referring to himself as a “big supporter” of the sovereign wealth fund, amid fierce opposition from the Coalition, which has pledged to reverse any changes if it wins next year’s election.
In a new review of the country’s largest fund, a research house says it’s well placed to deliver attractive returns despite challenges.
Chant West analysis suggests super could be well placed to deliver a double-digit result by the end of the calendar year.
Specific valuation decisions made by the $88 billion fund at the beginning of the pandemic were “not adequate for the deteriorating market conditions”, according to the prudential regulator.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Spire Oaktree Opportunities XI Second Close
61.07 3 y p.a(%)
2
Spire Oaktree Opportunities XI First Close USD
59.21 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.56 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
31.06 3 y p.a(%)
5
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
26.81 3 y p.a(%)
