World's best growth in Australian pension funds
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7 September 2009
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Australia's biggest superannuation funds have outperformed their global peers with the highest asset growth in the world over the last five years, with half of those funds based in Melbourne.
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The Watson Wyatt and US investment newspaper Pensions & Investments survey of the top 300 global pension funds found that out of 28 countries, Australia had the highest asset growth in local currency terms with an increase of 14.4 per cent per annum.
The research also shows the Melbourne-based Future Fund is now the world's 11th largest sovereign pension fund.
Twelve Australian funds appeared in the top 300 and had a combined asset size of $US218 billion at the end of June last year, six of those funds are based in Melbourne.
The 12 Australian funds in the global survey are:
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- the Future Fund (ranked 52 and Melbourne-based)
- State Super (100),
- AustralianSuper (120 and Melbourne-based),
- QSuper (144),
- UniSuper (155 and Melbourne-based),
- ARIA (202),
- ESS Super (205 and Melbourne-based),
- First State Super (230),
- REST (251),
- HESTA (271 and Melbourne-based),
- Sunsuper (272) and
- Cbus (279 and Melbourne-based).
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When asset growth is measured in US dollar terms, Australia is ranked second place with an increase of 13 per cent per annum over the last five years, just behind Taiwan with its 14.3 per cent growth per annum.
According to News Limited, SuperRatings chief executive Jason Clarke believes the strong asset growth achieved by local super funds relative to their global peers was due to Australia's solid contribution system and the strength of the domestic economy and stock market.
"Over that time the big funds have averaged at least 15 per cent per annum contribution growth from all sources -- both employer and member contributions -- so that's certainly a very healthy statistic to boost up those figures," he said.
"And secondly, pension funds universally have a higher weighting to their own domestic equities and certainly in 2008, with a higher exposure to Australian equities, local pension funds would have done relatively better -- although they suffered a loss -- than the US where their exposure to 30 per cent US equities would have put them well behind other countries.”
Melbourne is home to a significant proportion of the Australian financial services sector. The size of the industry and its strong prospects for future growth has seen many global industry players and boutique fund managers establish a presence in Melbourne.
The Victorian Funds Management Corporation, six out of Australia’s top ten industry pension funds, and the Federal Government’s Future Fund are all managed out of Melbourne. Similarly 60 per cent of all Australian industry pension fund assets are managed in Melbourne.
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