Super assets - relative decline in retail funds assets compared to SMSF and Industry funds

Possibly the most significant market development in super over the last 20 years has been the relative decline of retail funds and the emergence of SMSF and industry funds.

SMSFs are the most significant long term threat to both retail and industry funds.  This is clearly shown by the current advertising focus on SMSFs and by industry funds developing products which are intended to mimic SMSFs.

APRA has estimated (as at 31 March 2013) that the total value of superannuation assets is $1.58 trillion.

SMSFs are estimated to constitute 31.5% of Australia’s superannuation assets, making SMSFs the largest superannuation sector.  The other sectors, in descending order, are retail funds with 26.3%, industry funds with 19.8%, public sector funds with 15.7% and corporate funds with 3.8%.  The missing 0.1% is held by small APRA funds.

For the March 2013 quarter, all superannuation sectors experienced growth in assets.  For industry funds, the growth was 5.7% in super assets, SMSFs assets grew by 4.7% with the other sectors having 4.3% (public sector and the corporate sector) and 4.2% (retail sector) growth.

By way of comparison, APRA estimated that the growth in the various sectors assets for the year to June 2012 was 6.6% for industry funds, 5.7% for public sector funds, 3.7% for small super funds (SMSFs, single member ADFs and small APRA funds), 0.9% for retail funds and negative 4.1% for corporate funds.

Our editorial comment is “The future of super does seem to be between industry funds and SMSFs with industry funds acting as incubators for SMSFs”.

Sources: APRA Quarterly Superannuation Performance March 2013 (released 23 May 2013).  Also APRA Annual Superannuation Bulletin June 2012 (issued 9 January 2013).