Despite recent turbulence, revenue will continue to grow
Melbourne, Australia (PRWEB) December 24, 2012
The prominence of superannuation (super) in Australia means superannuation funds management is big business. Australia's funds management market is the fourth-largest in the world. According to IBISWorld industry analyst Ee Jen Lee, “much of this is due to the nation's $1.4 trillion superannuation system, which ensures a steady flow of retirement savings into the market”. Investment managers have benefited from this flow. As at September 2012, an estimated 44.3% of the $1.27 trillion in funds under investment managers were in the form of superannuation savings. The major companies in the industry – AMP Limited, Commonwealth Bank of Australia, National Australia Bank Limited, and Australia and New Zealand Banking Group Limited – account for a significant share of the Superannuation Funds Management industry.
In 2012-13, IBISWorld expects the Superannuation Funds Management industry to generate revenue of $10.3 billion from the estimated $579.2 billion in superannuation assets for which they will provide investment services. Over the five years through 2012-13, industry revenue is projected to grow at a compound annual rate of 0.7%. This is largely due to the sharp reduction in revenue over 2007-08 and 2008-09, and an unexpected turn of events in the beginning of 2011-12. “The large decline occurred due to the collapse in asset values caused by the global financial crisis,” says Lee. With the value of superannuation savings falling by 20.9% over this two-year period, super fund managers saw the value of funds under management (FUM) and funds under administration (FUA) shrink dramatically. This was significant, given that management and performance fees are often calculated as a percentage of FUM or FUA.
The industry will continue to grow at a conservative rate, as the investment environment cautiously watches developments in Europe and the United States. The industry's long-term outlook is mixed. Super fund managers will benefit from strong growth in super assets, but significant reform of the industry under Stronger Super lies ahead. The Federal Government's superannuation review has made a series of recommendations that aim to bring the cost of Australia's superannuation industry below 1.0% of assets.
For more information, visit IBISWorld’s Superannuation Funds Management report in Australia industry page.
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IBISWorld industry Report Key Topics
Industry participants provide investment management, administration and advisory services to superannuation funds. Service fees are earned as a percentage of the funds under management, administration or advice. Investment managers also receive commissions based on performance, with a portion determined by absolute returns and the rest by industry benchmarks. Therefore, investment managers can earn some performance commissions despite delivering losses.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
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