Superannuation funds had $400 billion invested in private market assets, jumping 34% in the two years to June 2024, Rainmaker Information analysis of APRA data shows.
Private real assets, classified as unlisted investments in property and infrastructure, was the largest component of private market assets in super, making up two thirds or $266 billion. In the two years, private real assets recorded an annual growth of 8%, the Institutional Roundup Report found.
Super funds allocated 10.9% of total investments to private real assets with some of the larger funds investing a higher percentage.
In private equity, super funds splashed $106 billion in this asset class, making it the second-biggest private market asset or a 27% allocation.
Private equity saw assets increase by 16% since June 2022, but only 5% since June 2023.
Australian Retirement Trust (ART), AustralianSuper, Hostplus and Aware Super are the funds with the biggest private equity appetite.
Private debt is the smallest yet the fastest-growing component of private market assets in super.
It makes up 7% of total private market assets but has grown 75% in two years to June 2024, from $15 billion to $27 billion.
Despite its rapid growth, super funds only allocated 1.1% of total investments to private debt, Rainmaker said, noting that Hostplus at 2.8% and MLC Super Fund with 2.7% had the highest allocations.
AustralianSuper, meanwhile, reduced its allocation from 2.2% to 1.5% over the two-year period. In a submission to ASIC’s recent public and private markets discussion paper, Super Members Council (SMC) said superannuation investments in the private sector can drive long-term financial system stability and prosperity for Australians.
SMC compared three asset classes: Australian listed equity, international listed equity, and private equity (internal rate of return). It found the performance of each returned 8.3% p.a., 12.1% p.a., and 14.7% p.a. respectively in the five years to 30 September 2024.
“Over the long-term, funds with more illiquid investments such as unlisted infrastructure have experienced higher risk-adjusted returns, which suggests they have captured a return premium for investing in these assets,” the paper read.
