Private equity secondaries out of reach for most super funds, Blackstone says
Despite strong private equity performance, most Australian super funds are locked out of the lucrative secondaries market due to regulatory and cost constraints.
Superannuation funds are missing out on the high returns offered by the private equity secondary market, hamstrung by regulations that prevent them from participating.
Speaking at the Asia Pacific Financial and Innovation Symposium in Melbourne on Tuesday, Blackstone president and chief operating officer Jon Gray said most super funds were unable to invest in secondaries, despite many having delivered strong risk-adjusted returns from private equity.
Gray pointed to regulation that has pushed super funds to prioritise costs over net returns.
“Cost is important… What I worry about a little bit is the unintentional outcome, which is you get adverse selections in terms of strategies and managers because it's only cost. Most of the superannuation funds can't do secondaries,” Gray said.
