Super funds currently hold almost 40% of the ASX with anincrease of 6.7%p.a. over the past five years and 9.4%p.a. over thepast decade. With this share growing roughly one percentage pointper year - in 10 years it will be 50% and in 20 years ownershiplevels could be 60%. This growth is significantly faster than thegrowth of the market capitalisation of the ASX.
Researchby Rainmaker Information has found that not for profit super funds(including industry funds) account for just under one half of theASX under superannuationinfluence, retail funds one quarter, and SMSFs the remaining 27% ofthis.
It is estimated that super funds hold more than 20% of thebanking sector but if the proportion that SMSFs own are included;the combined ratio could be as high as one third within thissector.
"Super funds becoming dominant shareholders means theimpacted companies will have to get used to having larger, moreinterested investors" said Alex Dunnin, executive directorof research at Rainmaker.
"While this may challenge some companies that are notused to dealing with larger, active investors, the upside is thatthis new dynamic will lower the cost of capital for these companiesand will actually help them expand their growthopportunities," Dunnin added.
SMSFs, despite the large amount of money they have invested intoASX-listed companies, have only a weak voice among company boardsbecause their share ownership is diluted across hundreds ofthousands of separate super funds.
Super funds have $3 billion of new money to invest every weekand about one third of that is likely to go towards investing inAustralian companies.
"The next frontier is how do we get super funds to investin smaller companies? That is, how do we create channels to enablesuper funds to invest into start-ups as well as small businessesand how do we create channels for them to invest into businessesthat may not be listed on the ASX, such as those in the agriculturesector." said Dunnin.
FUA in managed accounts platforms has continued its rapid growth, increasing by almost 50% p.a. in the last three years.
Australian retirees used to overwhelmingly favour retail superannuation funds. Not anymore.