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Performance of super funds in Australia

Performance of super funds in Australia: The contribution of alternatives and active management

Key researchers

Ummul Ruthbah
Aditya Shankar

Project background and aims

With total assets reaching $4.1 trillion in 2024, the Australian super industry is one of the largest pension systems globally. The major super funds manage substantial portions of these assets, employing diversified portfolios that include significant allocations to alternative investments like infrastructure, private equity, and real estate.

This strategic shift towards alternative investments reflects a broader trend aimed at enhancing returns, reducing volatility, and providing diversification benefits. Unlike traditional asset classes, alternative investments offer unique opportunities and challenges, making their role in the superannuation industry a critical area of study.

This study delves into the impact of alternative investments and active management on the risk-adjusted returns of Australia's largest super funds. By employing rigorous benchmarking methodologies, we aim to uncover whether these strategies have indeed contributed to superior portfolio performance.

Performance of Super Funds in Australia: The Contribution of Alternatives and Active Management

This paper evaluates the performance of Australia’s largest superannuation funds by comparing their default MySuper products to custom public market equivalent (PME) benchmarks. Using two decades of monthly data and returns-based style analysis, we find that most funds generate statistically significant excess returns. This outperformance is robust across Sharpe, Sortino, and Omega ratios, as well as CAPM alphas, and holds under alternative benchmarking approaches. However, since 2021, excess performance has moderated. These findings contrast with international evidence questioning the value of active management in institutional portfolios. In the Australian context, large super funds have used diversified allocations, including unlisted assets, to improve member outcomes. Our results contribute new evidence on pension fund performance in a system characterised by long-term investment horizons and distinctive portfolio strategies.

Read the research brief

Read the working paper

Performance of Super Funds in Australia: June 2025 Update

This research brief updates our February 2025 analysis (Ummul and Shankar, 2025) of Australia’s largest super funds using data through June 2025. It focuses on the last 10 years – the same horizon used in APRA’s performance test. Using customised PME benchmarks, we evaluate whether super funds have delivered value above liquid public market portfolios. Our results confirm consistent long-term outperformance for most of the funds, especially on a risk-adjusted basis – an important factor not considered in APRA’s current test.

Read the research brief June update

Performance of Super Funds in Australia: December 2025 Update

This research brief updates our June 2025 analysis of Australia’s largest super funds, using data through December 2025, and expands the scope to include 11 additional funds. All the funds in the report accounted for 65% of the total AUM among APRA-regulated funds. We focus on the past 10 years – the horizon used in APRA’s performance test – and evaluate whether these super funds delivered value above their liquid market benchmarks on both an absolute and risk-adjusted basis. Our findings confirm that most funds consistently outperformed custom Public Market Equivalent (PME) benchmarks over the long term, particularly on a risk-adjusted basis, though recent trends indicate a narrowing of the outperformance gap.

Read the research brief December update

Comparing PME Benchmarking with APRA's Performance Test

Superannuation fund performance measurement is a central policy issue in Australia’s $4 trillion system, with APRA’s annual MySuper performance test designed to protect members by benchmarking net returns against passive portfolios. While this framework promotes accountability, it has drawn criticism for not adjusting for risk, discouraging innovation in areas like ESG and alternatives, and incentivising “index-hugging,” especially when benchmarking illiquid assets. Our Public Market Equivalent (PME) methodology tailors benchmarks to each fund using returns-based style analysis, capturing dynamic risk exposures and isolating true alpha. By using net-of-fee, net-of-tax returns and a risk-adjusted approach, PME benchmarks can address some of the key shortcomings of APRA’s test and offer a more nuanced tool with important policy implications for enhancing super fund evaluation.