In its latest analysis, Rainmaker found that superannuation funds own 38 per cent of the market capitalisation which is in line with the 37 per cent ownership super funds held at the end of March 2021.
This was split across not-for-profit funds (13 per cent), retail funds (9 per cent) and smaller funds or SMSFs(15 per cent).
At the end of June 2022, industry super funds held 18 per cent of members’ money in Australian stocks, while retail funds held 28 per cent equating to about $316 billion for NFP funds and $193 billion for retail funds.
“While the nominal value of ASX shares owned though NFP funds increased 108 per cent between 2013 to 2022, the nominal value of ASX shares owned through retail super funds increased only half as fast, by just 56 per cent,” Rainmaker said.
“Given ASX market capitalisation increased 106 per cent through this same period, it means NFP funds’ interest in the ASX is only keeping pace with this growth.”
The ownership concentration by industry super funds has been a concern for a number of years and in a 2021 inquiry was conducted to find out if big super’s domination over the Australian share market was stifling competition and leading to consumer harm.
Rainmaker said the attention on super fund dominance is largely due to the fact that a small number of large funds can have disproportionate influence.
“This affect is magnified if we appreciate that what sets the market price for an ASX-listed equity is not the value of the aggregate holding but the willingness, or otherwise, of investors to sell or buy these stocks. This explains, conversely, why despite the large level of ASX shares by SMSFs, they have only minor market influence: Their ownership is not concentrated,” Rainmaker said.
In other words, super funds prefer other asset classes and are not buying as many Australian equities as previously projected.
This means that Australian companies and the ASX need to work harder to convince Australia’s super funds to invest locally, or at least to invest through the ASX, Rainmaker said.
