Super funds bring more investment management inhouse

Australian superannuation funds are taking greater control of investment management, with internal teams accounting for a growing share of assets as funds increase in scale and investment sophistication.

Rainmaker information analysis of 40 superannuation funds found the average proportion of assets managed internally increased from 9.3% in 2019 to 22.1% in 2025.

The shift was most pronounced across liquid asset classes, where larger funds have increasingly built the sale and capability to manage investments directly.

Cash recorded the largest increase, with the proportion of assets managed internally rising by 26 percentage points over the period, followed by Australian equities, which increased by 21.6 percentage points.

Internal management also increased across Australian fixed income, infrastructure, internal fixed income, and property. Private equity, however, continued to rely heavily on specialist external managers.

Rainmaker Information associated director research, Camille Schmidt said the trend reflected the growing capabilities of large super funds.

"The research shows internalisation is a defining feature of Australia's superannuation sector, although the trend is far from uniform across all asset classes," Schmidt said.

"Growing scale is allowing some funds to bring more investment capability in-house, particularly in areas where they believe direct management can improve efficiency and member outcomes."

Despite the shift, external managers remain an important part of superannuation investment strategies. Rainmakers' analysis of around 8400 mandate relationships found external mandates typically lasted around 2.9 years.

Schmidt said funds were increasingly taking a selective approach to deciding what capabilities to retain internally and where to use external expertise.

"While the trend towards in-house asset management is expected to continue, the emerging model is selective internalisation across both public and private markets, combined with external managers where they provide differentiated expertise, access, capacity or risk diversification," Schmidt said.

For institutional managers, the shift is creating a more competitive mandate market.

"Winning and retaining mandates will increasingly require managers to demonstrate capabilities that super funds cannot readily, or cost effectively develop and maintain in-house," Schmidt said.

She said managers would need to demonstrate scale, specialist capabilities, and sustained performance to deliver value as super funds become larger and more sophisticated.