Red tape or risk aversion? How big super’s $54b VC shortfall is costing Australians
New research claims red tape is costing retirees $20,300 each as the super funds under-invest in venture capital, yet major funds insist they're backing startups despite the constraints.
Despite new modelling suggesting superannuation funds are collectively $54 billion short on venture capital allocation, the industry's biggest players each insist they're actively backing Australian startups, though some admit they are being hampered by regulation.
Hostplus chief investment officer Sam Sicilia argues superannuation funds are key to creating more Australian unicorns, but agrees that current regulatory settings are making investment into startups and high-growth private companies appear less attractive than they really are.
A report commissioned by the Australian Investment Council found the under-allocation leaves members up to $20,300 worse off at retirement and translates to about 140,000 fewer Australian jobs.
Private equity has returned 18.2% annually over the past decade — more than 10 percentage points above Australian listed equities according to the report — yet MySuper products direct only 4.4% of assets to the sector on average, partly because each percentage point added to private equity lifts the probability of failing the performance benchmark by 0.5 percentage points.
