Australia’s “Super Six” – AustralianSuper, Australian Retirement Trust, Aware Super, UniSuper, Hostplus and Cbus – are helping to shape the direction of institutional investing globally, according to the Thinking Ahead Institute’s (TAI) Asset Owner 100 Study.

“We identified five clusters of funds that are most homogenous and regionally inter-connected. These pools of asset owners in the US, Canada, Europe, Middle East and Australia collectively manage around US$13 trillion [$19.7 trillion] and are… setting global investment trends, governance practices, and sustainability standards,” said Jessica Gao, director at TAI.

Other regional blocs include the Public Seven, Maple Eight, Euro Nine and Gulf Five. Of the bloc, the Gulf Five and Super Six are “less mature”, the TAI report says.  

Common themes across the asset owners TAI identified include the use of total portfolio thinking, a focus on risk and resilience, business models in which investor partnerships “are critical” and wide inter-connectivity of stakeholders. They also tend to engage in some level of “co-opetition”, collaborating on deals and sharing intelligence.

The Canadian Model of governance and internalisation, and the total portfolio approach used by Canada Pension Plan, the Future Fund and New Zealand Super, are also “both widely imitated”, but can’t solve all the challenges super funds and the broader asset owner ecosystem now face – namely turning data and information into something that can be used to underpin decision making, which TAI says is a “holy grail” that AI might be able to help them find.

“AI has a particularly attractive use case for asset owners in integrating data by blending existing knowledge and beliefs with various fresh data sources and context to reach new levels of decision-useful intelligence,” the report says.

“Given the reliance asset owners place on asset managers for technology and data infrastructure, it is increasingly important that the asset managers stay ahead of the curve in adopting these tools. While asset owners have similar use cases for AI as asset managers, their own adoption is typically oriented toward oversight, decision-support, and governance, reflecting smaller internal teams and the central role external managers play in day-to-day implementation.”

Australian asset owners are also moving quickly to adopt total portfolio approach (TPA), abandoning the siloed investment approach in favour of one that is “more agile, resilient and aligned with long-term goals”.

“Adoption of total portfolio approach across Australian funds is also increasing in momentum, despite super fund constraints linked to the design of the superannuation performance test,” said Martin Goss, co-head of governance, Investments Australia at WTW.

“By encouraging collaboration across teams and clarifying accountability for total-fund outcomes, TPA enables more efficient use of capital at the total-portfolio level and supports stronger longer-term performance potential.” 

That uplift will also be useful for dealing with a longer-term outlooks that includes systemic risks that might materialise “more quickly than investors anticipate”, including climate change, food security and cyber.

“Looking ahead, asset owners face a landscape of moderate global growth, aided by policy support, but still exposed to risks from renewed inflation pressures, shifting trade dynamics, and geopolitical developments,” the report says.