Key takeaways

  • Super fund balances have climbed to $3.65 trillion, an increase of $329 billion in the year to June 2024, or $6.3 billion every week.
  • Super funds have upped their holdings of global equities, domestic fixed income and domestic equities, while deploying cash and cutting exposure to global fixed income.
  • At a household level, the average super balance stands at around $325,000 up over 8% from June of 2023.

Super funds increase equity exposure, scale back on cash 

As the Australian superannuation industry has continued to rapidly expand, hitting $3.6 trillion assets under management (AUM) as of June this year, super funds have had to look overseas to diversify their portfolios, bolstering exposure to global stocks more than any other asset class.

Assets are up $329 billion on 2023, representing inflows of around $6.3 billion every week. At a household level, the average super balance stands at $325,000, up 8.2% year-on-year.

During the first six months of 2024, super funds upped exposure to global equities by 227 basis points (bp) and added to domestic stocks by 37 bp. In fixed income, super funds’ weighting to Australian assets grew by 59 bp, while cash holdings were scaled back by 175 bp and global fixed income contracted by 104 bp.

“The growth of super funds’ global equities portfolios, both in absolute size and as a percentage of total invested assets, is eminently sensible as their AUM outgrows the domestic market,” said Jason Steed, head of Equity Research, Australia and New Zealand at J.P. Morgan.

Super fund asset allocation (A$bn)

Super funds and the Magnificent 7 

Wider investment opportunities and better liquidity makes the U.S. an appealing market to super funds, offering diverse opportunities, lower trading costs and in certain sectors, less stretched valuations.

“In that vein, one could reasonably assume that mega-cap U.S. tech would hold a particular appeal for super funds,” said Steed.

However, J.P. Morgan Research analysis reveals super funds are underweight (UW) five of the ‘Magnificent 7 stocks’ – the select group of mega-cap tech stocks, Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla that alone accounted for over 60% of the S&P 500’s return last year, including dividends.

Domestic vs global equities as a % of invested assets

Alphabet (+ 46 bp overweight) and Amazon (market weight) were the only exceptions, Notably, though, in the first half of the year, super funds have sharply reduced their UW positions in the Magnificent -7 by 159 bp.

At a stock-level, the largest OW positions in the U.S. equity market are in HCA Healthcare, Alphabet and Motorola Solutions, while the deepest UWs are in Apple, Nvidia and Berkshire Hathaway.

Super funds active Magnificent 7 holdings 

Related insights

  • Securities Services

    The Future of Superannuation: How data and digital innovation are reshaping the industry

    November 25, 2024

    Australian super funds are finding innovative ways to deliver more engaging experiences to members.

  • Global Research

    What could push India’s equity market higher in the long run?

    September 10, 2024

    India’s equity market has been on a relentless bull run since the pandemic, but recent lackluster earnings and slowing GDP growth may mean stocks take a pause — at least for now.

  • Global Research

    Global Research

    Leveraging cutting-edge technology and innovative tools to bring clients industry-leading analysis and investment advice.

This communication is provided for information purposes only. Please read J.P. Morgan research reports related to its contents for more information, including important disclosures. JPMorgan Chase & Co. or its affiliates and/or subsidiaries (collectively, J.P. Morgan) normally make a market and trade as principal in securities, other financial products and other asset classes that may be discussed in this communication. This communication has been prepared based upon information, including market prices, data and other information, from sources believed to be reliable, but J.P. Morgan does not warrant its completeness or accuracy except with respect to any disclosures relative to J.P. Morgan and/or its affiliates and an analyst's involvement with any company (or security, other financial product or other asset class) that may be the subject of this communication. Any opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. Past performance is not indicative of future results. This communication is not intended as an offer or solicitation for the purchase or sale of any financial instrument. J.P. Morgan Research does not provide individually tailored investment advice. Any opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and are not intended as recommendations of particular securities, financial instruments or strategies to particular clients. You must make your own independent decisions regarding any securities, financial instruments or strategies mentioned or related to the information herein. Periodic updates may be provided on companies, issuers or industries based on specific developments or announcements, market conditions or any other publicly available information. However, J.P. Morgan may be restricted from updating information contained in this communication for regulatory or other reasons. Clients should contact analysts and execute transactions through a J.P. Morgan subsidiary or affiliate in their home jurisdiction unless governing law permits otherwise. This communication may not be redistributed or retransmitted, in whole or in part, or in any form or manner, without the express written consent of J.P. Morgan. Any unauthorized use or disclosure is prohibited. Receipt and review of this information constitutes your agreement not to redistribute or retransmit the contents and information contained in this communication without first obtaining express permission from an authorized officer of J.P. Morgan.