Despite global market turmoil, Australian superannuation funds remain committed to investing in private equity, according to a study by the University of New South Wales (UNSW).
A survey of major super funds found that private equity commitments currently are and will remain about 6 per cent of total assets. The allocation level has grown from 4.5 per cent of total assets in 2005.
Diversification benefits were the main objective behind private equity investment said UNSW school of actuarial studies associate professor John Evans.
Respondents also indicated that they were moving away from US and Australian equities in favour of Asia and were looking for a 11.6 per cent nominal return from private equity investments (down from 16.5 per cent in 2005) and an outperformance of publicly listed equity of 3.4 per cent per annum.
Evans also found that super funds were reticent about the relative performance risk of equity investment along with the lack of transparency in the sector.
“In Australia, superannuation funds are a major source of capital for the development of the economy, with assets of about $1 trillion and growing rapidly,” Evans said.
