Direct super fund investment to reach $157b by 2025

Direct super fund investments in ASX 200 companies are expected to reach $157 billion by 2025, according to the Australian Securities and Investments Commission (ASIC).

In a summary of evidence submitted to the Senate for the Treasury Laws Amendment (2021 Measures No.1) Bill, the regulator said direct super funds investments had doubled in the last five years to $78.3 billion.

If this rate continued, it would reach $157 billion in 2023. In comparison, the amount in 2008 was $16 billion.

ASIC said, at the end of December 2019, some $418 billion of the $1.9 trillion superannuation funds under management were invested in Australian-listed equities, $106 billion was invested in international-listed equities and $17 billion was in unlisted equities. 

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The figures highlighted the high proportion of retail participation in the Australian Securities Exchange (ASX), either directly or via their super funds which differed Australia from other countries worldwide and made continuous disclosure requirements, the measure debated in the bill, even more crucial.

More than 80% of Australians had exposure to the ASX via their superannuation while around 35% held direct exposure.

“Australian investors including superannuation funds and retail investors comprise a substantial proportion of this trading. It is vital, therefore, that investors can trade in an informed market,” the regulator said.

The Senate’s economic reference committee recommended that Schedule 2 of the Bill, which sought to make temporary continuous disclosure obligations permanent, not be passed and one reason was the negative impact on retail investors.

If the measures were passed, it said, it would make it more difficult for shareholders to hold directors accountable for withholding price-sensitive information or providing misleading information and lead to a decrease in the amount of information disclosed to the market.

“The committee is particularly concerned about the disproportionate and negative impact that the proposed changes would have on retail investors, including self-funded retirees, mum and dad investors and the growing number of younger Australians who are participating in the share market,” it said.

“As Dr Sean Foley [associate professor of finance at Macquarie University] noted, 'the information asymmetry in the market is heightened for retail investors, which means that any reduction in the information provision by listed entities is likely to have a disproportionate impact on retail investors'.”