22 super funds control 93.2% of AUM

It has taken nearly 25 years, but a prediction made by US research, analytics and consulting firm, Cerulli, back in 2000 has come closer to reality in 2024 with 22 superannuation funds now accounting for 93.2% of assets in the superannuation industry.

The bottom line is that in the Australian superannuation funds sector the large are getting larger while smaller funds are tending to commensurately fade away or become the subject of mergers.

This has been confirmed by the latest KPMG Super Insights research which has confirmed the degree to which mega funds and large/medium superannuation funds now dominate the superannuation sector.

The KPMG report has confirmed there are now eight mega funds with more than $100 billion in assets under management with Hostplus the most recent addition to that number with $115 million in AUM as at 30 June, last year.

Four of the those eight funds are industry funds but an important point made by the KPMG research is that there are another six funds sized between $40 billion and $50 billion and eight funds between $25 billion and $50 billion – an increase from four identified in this segment a year earlier.

KPMG said that in terms of fund size, growth had been concentrated in the funds segment with assets between $25 billion to $50 billion which had doubled in size, whereas the assets under management for the fund segment below $25 billion had contracted.

The research has pointed to the benefits of scale noting that between FY23 and FY24 there was an increase in average operating cost per member from $230 to $237 across all funds while, in contrast, the average operating cost on an asset basis decreased from 0.24% to 0.23% for all funds largely due to the strong growth in AUM.

KPMG said that highlighting the benefits of scale in the industry the 14 funds with AUM of over $50 billion have an average cost per member of $217, whereas the 14 funds between $10 billion and $50 billion had an average cost of $375.

The research looked at the continued scale and momentum of the mega funds, noting that market share of the mega funds by AUM had increased from 58.5% in the 2023 financial year to 63.1% in FY24.