POWERED BY MOMENTUM MEDIA
Study finds super funds should do more direct SME lending
Under the right circumstances super funds could provide capital for growth to small to medium-sized enterprises (SMEs), complementing more traditional capital sources such as banks, a new discussion paper has found.
The paper, “Should superannuation funds do more direct lending to business?” by Industry Super Australia chief economist Stephen Anthony, argued that funds’ traditionally low asset allocation towards credit to non-financial corporations could be improved via an upgrading of funds internal assessment capacities or via partnerships with banks.
Currently, Australian banks and overseas investors – including pension funds – are the dominant players in lending to domestic non-financial corporations.
Dr Anthony said there was significant untapped potential for super funds in this asset class.
“Expanding superannuation funds’ presence in direct lending will help local business grow and deliver economic benefits. We are in a better position to commit to long-term loans in Australian dollars – one important factor as businesses doesn’t need to worry about currency risks,” he said.
“SMEs need better access to both debt and equity capital and super funds can help. But any arrangements need to offer attractive returns to funds.”
Dr Anthony said the recent spate of corporate leaders calling for super funds to participate more in this space needed to package propositions with more of an eye to returns for super fund members and how the superannuation system works.
“Businesses calling for more super fund participation in direct lending should recognise that funds’ capacity in this area relies on steady and growing inflows from workers’ contributions – facilitated by the existing default superannuation system. Business needs to be aware of this and continue to support and enhance the default system that may ultimately deliver the funding they need one day,” he said.
Recommended for you
Governor Michele Bullock took a more hawkish stance on Tuesday, raising concerns over Donald Trump’s escalating tariffs, which sent economists in different directions with their predictions.
Equity Trustees has announced the appointment of Jocelyn Furlan to the Superannuation Limited (ETSL) and HTFS Nominees Pty Ltd (HTFS) boards, which have oversight of one of the companies’ fastest growing trustee services.
Following growing criticism of the superannuation industry’s influence on capital markets and its increasing exposure to private assets, as well as regulators’ concerns about potential risks to financial stability, ASFA has released new research pushing back on these narratives.
A US-based infrastructure specialist has welcomed the $93 billion fund as a cornerstone investor.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Global X GlobalX FANG+ ETF
33.51 3 y p.a(%)
2
Spire Oaktree Opportunities XI Second Close
32.68 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.62 3 y p.a(%)
4
Spire Oaktree Opportunities XI First Close USD
31.36 3 y p.a(%)
5
Fidante Credit Suisse Global Private Equity
29.60 3 y p.a(%)
