The $300 billion Australian Retirement Trust has received another boost to its total assets under management, announcing plans to absorb the $9 billion Qantas Super and its 26,000 members.
The Qantas fund is open to employees and spouses of the aviation icon, and is one of the last remaining corporate funds that hasn’t been opened to the public.
The Qantas deal came after ART just took four smaller funds under its wing: AVSuper, Woolworths and Endeavor Group, Commonwealth Bank Group Super, and Alcoa Super. The asset transition totalled $19 billion.
Following the announcement, a long-time industry observer told Investment Magazine that it’s impressive that ART managed to digest significant merger activities while making other changes at the same time, such as launching a new investment menu in July.
“Up till now, Australian Retirement Trust has been somewhat having to refocus itself internally on how it puts itself together to be set for the future,” they said.
“I think they’re actually now going to start seeing the benefits. It will start speeding up because they’re not having to run number of funds in the back end – it’s actually quite a decent achievement.”
Although the consolidation is still subject to both ART and Qantas Super completing their final assessments regarding member interests and equivalency of rights, and signing a Successor Fund Transfer Deed, ART chair Andrew Fraser said the deal will “cement” the ART’s position as “an industry leader in merger and transition”.
“The last financial year has been the biggest year of transitions for Australian Retirement Trust,” he said.
“As one of the largest defined benefit providers in the market, we have the skills to administer a fund with a membership profile like Qantas Super.”
ART itself was the result of a mega-merger between Queensland-based Sunsuper and QSuper in 2022. The industry has since been waiting to see whether (or when) the fund can draw level and overtake the nation’s largest player, the $335 billion AustralianSuper.
AustralianSuper said it expects to hit $500 billion AUM within the next five years, in an estimate provided in 2023, while ART is aiming to cross that threshold in 2030.
In getting there, AustralianSuper has one big advantage: a lot more members are actively choosing to join the fund, whereas ART’s growth so far has been merger-driven.
An analysis by the Conexus Insitute* of APRA data at the end of FY23 shows the difference between AustralianSuper’s and ART’s inflow compositions.
When focusing on member-driven flow changes – that is, removing the one-off impact of mergers – AustralianSuper grew faster overall. Its net flow/net assets ratio was 6.6 per cent, while ART’s was 2.8 per cent.
Net inflow was then split into natural flow (related to contributions, benefit payments and first-time super members) and competitive flow (the net of roll-in and roll-out, reflecting member switching activities). While both funds have considerable natural flows, the analysis found that AustralianSuper has an industry-leading competitive flow.
Having unveiled a flashy new branding with the tagline ‘awaken your super’ in April and ramped up marketing efforts both on the consumer and adviser-facing channels, it is clear that ART wants a piece of the competitive inflow action.
ART also opened a London office in April, joining AustralianSuper and Aware Super in a move to more effectively harvest the region’s investment opportunities. However, speaking to Investment Magazine at the time, chief investment officer Ian Patrick was quick to stress that the fund does not want to get ahead of itself.
“The point is having a dedicated space…fit for size for what our footprint is in the UK, and completely discreet so we can conduct any business in a confidential way,” he said.
An ‘awakened’ ART will no doubt give the industry plenty to talk about in the next few years.
