Up to 21 funds representing $400 billion in assets could merge in the “near-medium term”, according to The Conexus Institute’s* 2026 State of Super report – a significant increase from its 2025 assessment, and one the institute says comes down to the “possibility of sizeable consolidation in the for-profit fund sector”.

The findings mean “that more substantial changes to the industry landscape may take place”, according to Conexus Institute executive director David Bell and research fellow Geoff Warren. The research will be presented at today’s Investment Magazine Chair Forum. 

The funds that could merge straddle two groups, the report says: funds with low scale and low flows that could face more business-related pressures and regulatory scrutiny; and funds where a merger might be strategically beneficial even if there is a “defensible case”  to continue as a standalone fund.

But The Conexus Institute also considered whether a fund had already undertaken a merger or experienced a change in ownership structure or strategic model; whether it was an “integral component of a larger business operation”; and whether there had been reported rumours that it might be considering a merger.

“If such mergers occur, the industry size profile… could change markedly over the next few years, including the potential for new entrants to the mega fund group,” the report says.

Similar analysis, undertaken in the 2025 edition of State of Super, found a prospective merger pool of 13 funds managing circa $140 billion in assets. While The Conexus Institute didn’t identify the funds in that pool, other charts in the document showed that funds that fit into the low scale, low flow peer group included Vision Super, Russell Investments, Prime Super and NGS Super. Funds in the second main group – where a merger might be strategically beneficial – included Brighter Super, CareSuper, Equip, Australian Ethical and Future Super.

But while there might be a “reasonable number of merger candidates” in this year’s analysis, The Conexus Institute thinks it’s unlikely the industry will see consolidation across that entire pool of merger prospects. For example, the fund type usually needs to be compatible, while funds that have already done a merger or are undertaking systems uplift might be more cautious.

“It would be difficult for a profit-to-member fund with a relatively small option range to merge with a platform-based retail fund, albeit not impossible (with Brighter Super an interesting case study),” the report says.

“Funds that are digesting substantial merger activity undertaken in recent years or changes to major service provider arrangements may be hesitant to take on mergers until these changes are bedded down.”

The Conexus Institute also thinks some funds may be too small to be attractive merger targets and that some of the remaining funds may target specific market sectors.

“We have heard multiple anecdotes that funds outside the ‘big 15’ now view themselves as specialist funds and are planning to develop their strategy around this realisation,” the report says.

“This further constrains merger potential in scenarios where the niche offerings of specialist funds do not match up well.”

Inflow/outflow

The 2026 State of Super report also shows that competitive growth prospects for the profit-to-member funds are becoming more challenged as competition from retail platforms grows. As reported by this publication, the report shows AustralianSuper has gone into competitive outflow for the first time, with more money now leaving than arriving as a result of member switching activity.

“Without insight into AustralianSuper’s roll-in and roll-out profile, it is difficult to identify the driver of this change,” the report says. “It is likely that the adviser-directed theme impacted AustralianSuper (just like it impacted most industry funds and for-profit master trusts).”

“However it is also possible that the branding, marketing and advertising activities of other industry funds has nullified AustralianSuper’s position as the ‘go-to’ super fund for unadvised members. The fact that the fund’s relative performance has slipped may also have been a contributor.”

That thematic extends into the broader profit-to-member set, with UniSuper, Hostplus, HESTA, Rest and Cbus all experiencing “slippage”, though UniSuper remained positive and some funds, including Vision Super, saw an increase. Conversely, large advice platforms including AMP North, BT, CFS Edge, HUB24, IOOF (Insignia), Macquarie Super, Netwealth are winning flows.

“Large adviser platforms are experiencing strong positive competitive flows, while industry funds and for-profit master trusts are experiencing strong negative competitive flows,” the report says.

“The trend towards these thematics was evident in FY2024 but the magnitude has increased in FY2025, suggesting that these thematics continue to gain momentum.

“The majority of the funds experiencing high net competitive inflow rates are platforms that service financial advisers. Vanguard is not a platform but rather has a direct-to-consumer model and an adviser portal, which allows it to utilise strong historical relationships with the advice community and hence potentially benefit from adviser recommendations.”

Still, the profit-to-member funds, with their massive member bases, continue to experience very strong natural inflows, with AustralianSuper, Australian Retirement Trust and Hostplus leading the pack.

And while retail platforms are building a lead on competitive inflows, The Conexus Institute report proposes the possibility of“some sort of natural system equilibrium” involving specialisation by funds. Profit to member funds (which the report identifies as “type 1” might wind up managing the lion’s share of assets for younger members, while higher balance members might see value in seeking financial advice and switch to a retail platform (“type 2”).

“It may be natural for some industry funds to specialise in serving members who are younger and/or have smaller balances at scale, while super platforms focus on providing more personalised services to engaged, older members (and their advisers) with larger balances,” the report says.

“Although this might be a ‘natural’ state, it would be anathema for nearly all industry participants! Type 1 funds will inevitably aim to retain members throughout their life, while many Type 2 funds seek to attract members at younger ages.

“Both fund types could justify their actions as necessary to maintain and build assets in order to underwrite business sustainability. It hence may be difficult for the system to reach or maintain an equilibrium as we have set out given the existing competitive dynamics.”

*The Conexus Institute is a not-for-profit think-tank philanthropically funded by Conexus Financial, the publisher of Investment Magazine.