Understanding the super fund landscape

Combining size and inflow rates creates a much richer picture of the super fund landscape (for APRA regulated super funds). We are able to divide the universe into four quadrants based on these two dimensions. Some funds are in a strong position and the future is bright. For others there is uncertainty and work ahead.

Exploring the super fund landscape

We took the APRA fund level dataset (for FY2022) and, similarly to previous articles on size and inflow, we adjusted for the one-off impact of successor fund transfers, aggregated multiple product offerings under the same parent company, and accounted for announced merger intentions (but were unable to account for the BT asset transition into Mercer Super). Finally, we estimated assets for CSC based on assets managed rather than defined benefit liabilities.

We then created a plot of growth rates (annualised 1yr growth rate) against assets under management. Note that we removed small (sub $1b) corporate plans out of this analysis.

Some further explanation may help to understand the diagram. You will notice two red lines. The vertical line represents the $30b scale figure espoused by APRA. The horizontal line represents the 2.2{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48} system level growth (net inflows) recorded in FY2022 (note that this figure ignores investment returns). These two lines create a natural four quadrant segmentation of the super fund industry which we explore in further detail. In the diagram above we don’t name every fund (as the picture would become too congested), but each fund’s situation is detailed in our exploration below.

Quadrant 1 – Below scale but good growth

  AUM ($b) Growth Rate (1yr)
Netwealth 19.2 19.7{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
HUB24 17.2 30.3{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
Australian Ethical 6.3 10.4{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
Prime Super 6.1 3.0{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
AMIST 2.6 2.3{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
Guild 2.4 5.6{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
Fiducian 1.9 8.2{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
REI Super 1.9 2.2{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}

While below APRA’s scale figure, some of these funds (Netwealth and HUB24) will reach scale quickly if they maintain their high growth rates. It is important to acknowledge that scale is a complex issue, and we shouldn’t overly weigh on a single figure. For instance Netwealth, HUB24 and Australian Ethical all achieve business scale through other activities such as non-super product management. Highlights of the fastest growing funds are their successful targeting of specific segments, be it technologically advanced platform service offerings (Netwealth, HUB24 and Fiducian), ESG and sustainability thematic (Australian Ethical), and targeting a female demographic (Guild). The remaining funds on this list (Prime, AMIST and REI Super) benefitted from above-sector natural inflow rates.

Quadrant 2 – Good scale and good growth

  AUM ($b) Growth Rate (1yr)
AustralianSuper 271.7 9.4{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
ART 247.4 2.6{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
Unisuper 113.6 3.7{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
Hostplus 88.4 5.5{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
CBUS 78.0 3.0{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
HESTA 69.0 4.1{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
REST 67.2 3.9{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
Macquarie 31.8 10.7{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}

While all these funds are experiencing above-system growth levels, AustralianSuper and Macquarie are the standout case studies. It is a fascinating situation when the largest fund is also one of the fastest growers, benefitting from a strong natural inflow position and an entrenched leadership position in the competitive inflow marketplace. Macquarie, like Netwealth, HUB24 and Fiducian, appears to be performing strongly in the platform sector. The growth rate for the remaining seven funds, all not-for-profit, are largely driven by their above-system natural inflows (particularly strong in the cases of Hostplus, HESTA and REST). Unisuper performed strongly in competitive inflow while REST experiences sizable competitive outflows, a challenge for funds with a significant first employment membership.

Scale affords this sector a strong ongoing competitive offering, both from an investment and an operational fee perspective which should enhance their competitive opportunities.

Quadrant 3 – Good scale but sub-system growth

  AUM ($b) Growth Rate (1yr)
Insignia 167.3 -2.2{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
Aware Super 150.7 1.9{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
AMP 106.4 -3.8{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
CFS 102.1 -2.3{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
BT Super 98.7 -2.0{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
CSC 57.9 -0.2{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
Spirit / Care Super 45.5 1.3{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
Togethr 44.7 -0.6{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
Brighter Super 38.8 -0.7{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
Vision / Active Super 29.8 0.0{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
Mercer Super 29.3 -1.0{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}

There are two stories to explore here, one being big retail and the other being big profit-for-member funds.

Big retail funds (Insignia, AMP, CFS and BT Super) headlined the dollar outflow in our previous analysis (here) and their growth rates are well below system, but not catastrophic. The natural inflow situation for these funds is mixed (modestly positive for AMP and BT Super, flat for CFS, while Insignia experienced modest natural outflow). Where each of these groups is struggling is in competitive outflows (reasonable for BT, CFS and Insignia, but sizable for AMP). They face multiple challenges: not only the frequent anecdote about flows from the retail to the profit-for-member sector, but also competition from smaller for-profit competitors like Netwealth, HUB24 and Macquarie.

There is also a cohort of above-scale profit-for-member funds who experienced below sector growth. In some cases, Aware and the aggregated Spirit / Care Super, the degree of underperformance was very small. Most of these groups, the exceptions being Aware and Spirit / Care who were both stronger, experienced relatively modest natural inflows. Each of these groups, to different degrees, experienced competitive outflow. Of interest, if the proposed merger between Vision Super and Active Super did not proceed, both funds would be placed in Quadrant 4 of our analysis.

Scale affords the funding to develop strategies and make business investments required to develop a more effective growth strategy. The funds in quadrant three have sufficient scale to be able to maintain a competitive offering.

Quadrant 4 – Below scale and sub-system growth

  AUM ($b) Growth Rate (1yr)
Telstra Super 24.0 -1.4{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
Mine / TWU Super 19.0 -0.7{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
NGS Super 13.4 1.1{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
Commonwealth Bank Group Super 12.4 -8.0{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
Qantas Super 8.5 -5.7{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
BUSSQ 5.6 1.1{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
legalsuper 5.1 1.6{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
Perpetual 4.5 -3.9{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
First Super 3.7 1.6{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
Oasis 3.3 -13.1{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
ClearView 2.1 -3.7{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
Bendigo Super 1.5 -1.3{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
MIESF 1.0 -1.1{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
NESS Super 1.0 2.1{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}
FES Super 0.8 0.3{6d6906d986cb38e604952ede6d65f3d49470e23f1a526661621333fa74363c48}

There is a large dispersion in situation amongst funds in this quadrant. Corporate funds TelstraSuper, Commonwealth Bank Group Super and Qantas Super each experienced flat or modest natural inflow and suffered negative competitive flows (Commonwealth particularly) in a marketplace where they are less active in seeking new members. TelstraSuper’s size is much closer to APRA’s scale figure.

The proposed Mine / TWU merger still doesn’t reach APRA’s scale figure while creating a merged entity in outflow. Other profit-for-member funds are small and experiencing a growth rate marginally below industry average (NGS, BUSSQ, legalsuper, First Super and NESS). These groups all experienced solid natural inflows but were impacted by negative competitive flows.

From a sustainability perspective, it is the funds in quadrant four which are likely to face most scrutiny from APRA.

 

David Bell is executive director at The Conexus Institute.

Understanding The Design Elements That Help Create The Perfect Care Home In 2022

Thanks to speedy advances in professional medical science, we are all dwelling more time and the want to accommodate an getting older population will inevitably final result in a need for much more treatment households to be constructed more than the coming a long time.

With an raising overall body of analysis supporting what optimal assisted senior living ought to seem like, what are the features that need to have to be thought of for a undertaking beginning from scratch with a blank slate?

Like many issues in everyday living, there is no singular 1-dimension-matches-all silver bullet, but instead a assortment of contributions and insights essential stakeholders, ranging from city planners to architects and developers, can carry to the table to guarantee seniors transferring into household treatment can make the most of their twilight a long time.

Keeping connected

“Location, Locale, Location” is a very well understood principle in property circles and it remains just as valid when picking out the perfect care facility as it is for newlyweds shopping for their initially home.

Regrettably for potential people, the default option for developers on the lookout to assemble new facilities is normally to opt for out-of-city greenfield internet sites as this lets for the development of acquainted and predictable modular layouts.

The draw back is that this can trigger extra of a jolt for the resident going through the by now challenging decision to shift out of their present household and depart them feeling slice off from close friends, loved ones and regional features.

One particular likely resolution for developers is a far more specific targeting of adaptive reuse jobs in urban centers whereby existing constructions are repurposed to build new treatment amenities.

Not only is this a extra environmentally helpful approach but it can cut down the enhancement expenditures that have to have to be recouped and retain a relationship to the group.

WJW, a Chicago-centered company of architects specializing in investigation-based structure for disabled populations has taken this concept 1 stage even more in its new project to renovate the dilapidated former Ravenswood Medical center structure located in the Chicago neighbourhood of the very same name.

The facility, which opened last calendar year, not only gives state of the artwork facilities for senior living but the project also took advantage of a freshly handed Illinois law to significantly relieve the from time to time-painful changeover for citizens going into elderly treatment.

Under the new laws, assisted senior residing can be shared with other sorts of housing offering selected parameters, these as separate entranceways, are fulfilled.

Just one of the first projects of its variety nationwide, there are provisions for impartial dwelling on the upper floors with supported residing occupying the reduced floors.

Must a resident achieve a position where they require additional arms-on treatment, they can conveniently transition to the other aspect of the creating with a minimal of upheaval whilst preserving the considerable benefit of acquainted environment and locale.

Heidi Wang, a lover at WJW claims, “Nowadays, those going into aged care for the very first time still want to be engaged in their frequent community existence. They really do not want to be in some previous strip mall on the edge of town or out in the corn fields since which is the only accessible new construction land.”

She proceeds, “I believe more people are going to be demanding these varieties of destinations. We’re more and more viewing it in the market place in which seniors want to be in much more walkable liveable communities.”

The natural way, not all big urban web-sites will be viable for adaptive reuse and Wang suggests that the firm have to use their expertise to separate the wheat from the chaff – often turning absent far more proposals from civic authorities than they acknowledge.

However, she strongly feels that home builders for the elderly treatment sector need to begin becoming extra ground breaking and open-minded.

“We go to the Environments for Ageing Meeting every yr and that is entire of like-minded professionals like ourselves who are seeking to progress the bring about.

“Ultimately, on the other hand, we are not the financers of these jobs. We can have all the best strategies in the globe but if the developer would not see the value in it, or won’t comprehend the payback, then it falls on deaf ears. It really is our position to clearly show them what the optimistic effect can be,” Wang states.

It is what’s on the inside that counts

Of program, picking the excellent locale and transition arrangements is only half the battle and WJW has also carried out comprehensive study on the interior design components that encourage the most obtainable living expertise probable.

As Todd Wiltse, one more companion at WJW, explains, “There are have been levels and layers of laws affecting senior living which have been designed since the 1960s but it’s a circumstance of recognizing that individuals are just a starting off level,” suggests Wiltse.

“Of study course, we have to comply but they really don’t begin to touch on the complex spectrum of concerns seniors in assisted dwelling might encounter in taking care of and manipulating their atmosphere.”

Right here, the devil actually is in the depth and might incorporate far more noticeable provisions like how to rather disperse elevators so that some citizens aren’t pressured to stroll extended distances to the smart locale of get bars and lean rails.

Other features, especially similar to people suffering from cognitive problems, are much significantly less tangible.

For instance, Wang recounts observing on a single project that some people observed the shadows solid in the dining area by the tree branches outdoors to be disturbing.

She also refers to the point that even a little something as seemingly innocuous as picking the erroneous piece of artwork, like a pattern that could possibly be witnessed to resemble slithering snakes or the incorrect texture on a piece of furniture, can have unforeseen implications.

Wang emphasizes the great importance of diligent exploration and observation:

“The only way we can comprehend what’s performing is to go again and notice for ourselves how people are making use of the area we have developed and sit down and speak with the residents and staff. With Covid, we’ve been limited in our obtain to occupied structures but I’m hoping that we can get back again as soon as probable,” she suggests.

With improvements continuing apace in relation to related care, well being checking applying wearable units and voice activation by means of the proliferation of low-cost shopper models like Amazon Alexa, the workload is not likely to permit up any time before long.

The way culture cares for those people who have offered the most above the class of a extended daily life will preserve evolving and shifting. Additional predictably is that the greatest setting up level will usually be that when the time will come to make the move – they conclude up in the most available, affirming and welcoming setting that they can.