AustralianSuper has undergone 14 mergers and will join with the $4.4-billion AGEST if the Australian Government exempts the smaller fund from realising $45 million of investment losses when it merges assets. Should the union proceed, the nation’s largest industry fund could be within striking range of the number one ranking, according to Baker.

“AustralianSuper is just one merger away from jumping to the top of the table,” he says.

AMP leapt from third to first place by purchasing AXA Australia. MLC’s business was similarly boosted when its parent, National Australia Bank, acquired the wealth-management business of Aviva Australia for $825 million in June 2009. Navigator, the retail-investment platform owned by Aviva, was then integrated into MLC.

“The challenge with M&A is how to stop that market share from leaking away after spending all of that money on it,” Baker says.

System growth

Total superannuation assets grew by 11 per cent to 1.31 trillion in 2011. The largest 81 funds, which each manage at least $1 billion, together oversee $820 billion in assets.

Self-managed superannuation funds (SMSFs) hold 31 per cent of system assets, according to Tria. Large retail funds manage 26.3 per cent of assets, while large industry funds oversee 17.5 per cent and large public sector funds have 15 per cent. Small funds manage 4.6 per cent and 2.6 per cent is managed in other vehicles, such as eligible rollover funds.

SMSF service providers, such as accountants, financial planners and auditors, will target wealthy members of so-called collective funds as new sources of business, Baker says.

“The next part of the ocean they’ll fish is the top band of the collective funds, which can hold up to one-third of the assets.”