Data and scale

6 min read
6 min read

The rise of mega superannuation funds in Australia is being driven by unprecedented merger activity, rising fund inflows, and strong investment markets. It is estimated that more than three-quarters of all pension assets are managed by just 12 superannuation funds.

Investment returns – maximising the benefits of scale

Scale represents a fine balancing act for superannuation funds. There are clear benefits of scale, but these are often offset by growing complexity.

Data is a critical component providing insights that allow complexities to be managed as the fund scales. Often there is so much data to amass, and ways to use it, that there are multiple valid approaches for funds to take.

In terms of the best way to utilise data, we have seen the most successful funds identify a specific problem, then take an iterative implementation approach to bring forward as much value, as early as possible. One of the first places to start is the investment portfolio.

In terms of the best way to utilise data, we have seen the most successful funds identify a specific problem, then take an iterative implementation approach to bring forward as much value, as early as possible. One of the first places to start is the investment portfolio.

A fund’s portfolio can comprise thousands of listed and unlisted assets. While some data can be easy to collate, such as information from ASX listed companies, others are not so simple.

Data attached to unlisted investments such as private equity and infrastructure, is typically available on a lag compared to listed equities. As unlisted assets now comprise a substantial proportion of a typical fund’s asset mix, there could be an information gap, particularly when markets are volatile.

Funds are also managing exposures through more complex asset types and structures, such as derivatives or foreign exchange overlays. As Australia’s largest custodian, we work with funds to ensure they have this data as fast as possible, and often combine it with other external data such as environmental, social and governance (ESG) analytics. Having more comprehensive data at hand can help our clients make the most informed portfolio decisions, particularly at a whole of fund level.

Often this leads to a better understanding of risk and return, and ultimately better decision-making to improve returns. It can encompass managing risk and volatility or tilting the portfolio to maintain a strategic asset allocation.

Size brings benefits but also poses challenges

Size brings scale and a host of potential benefits. Many of the operational costs of running a business tend to be fixed, which provide a competitive advantage as organisations grow larger.

Bigger organisations tend to have more resources to invest in technology and data, creating a platform for greater efficiency and insights.

In the case of superannuation funds, scale also allows them to lower external investment management expenses and return those savings to members. Funds running in-house equities teams may have tighter control of their investment strategy which, for example, could influence a more pro-active responsible investment portfolio.

Other funds are going further by co-investing directly in unlisted assets alongside their fund managers, which also lowers fees.

However, with scale, organisations will encounter different challenges that will also need to be addressed.

Running a large business involves scaling and hiring more people, sometimes rapidly, which can make it harder to retain the culture and agility that built the organisation’s success. Further, as funds merge, meeting the needs of a more diverse member base—particularly as they approach retirement—becomes increasingly difficult. Funds will need to rely on their external partners for support as they look to continue delivering highly specialised services.

Smaller funds on the other hand are likely to find it easier to maintain their tailored approach to member engagement.

Member engagement – better data improves investor outcomes

Increasingly, big data is also being used to create a more tailored experience for investors.

Many funds are adding to the information they already hold such as age, account balances, and contribution levels to understand their investors. This data is already shaping investment portfolios and insurance offerings. For example, one fund that caters to predominately young female workers, uses information to add more downside protection to their investments should they need to take periods away from the workforce.

Another fund, that caters to many self-employed, casual workers and contractors, uses data to provide more tailored insurance arrangements. Ultimately uplifting the members’ experience and investment protection.

Taking data layering to another level, some funds are adding other information, such as census data, to learn more about the characteristics and preferences of their investors.

Access to quality data will benefit all fund types, from large industry funds to more niche segments as they seek to win and retain members in the longer term. In the future we expect to see an even closer alignment between member and investment data as funds ramp up their engagement strategies.

Access to quality data will benefit all fund types, from large industry funds to more niche segments as they seek to win and retain members in the longer term. In the future we expect to see an even closer alignment between member and investment data as funds ramp up their engagement strategies.

Many investors want to know that their super is being invested responsibly and aligns with their own ESG principles, particularly around climate change.

Funds can use data to deliver a better experience for their members and also identify when investors feel they are not getting what they need from the fund. Data about inflows and behaviour can identify those at risk of switching to another fund. Are members regularly checking the investment performance on the fund’s website? Have they stopped their contributions? These investors could be provided with additional educational material or other information to allay their concerns.

It will be even more crucial to understand these retirement needs as new regulations, such as Your Future, Your Super (YFYS), further increase change within the industry. Investors will now be ‘stapled’ to the fund they already hold (unless they choose otherwise) when starting a new job. How will funds pivot their marketing strategies to attract members when they can no longer rely on the default system?

Organisations need to understand the power and efficiencies of not just scale, but also data, to create a strong foundation for growth

Picture of By Lewis Moreline

By Lewis Moreline

head of fund services product, securities services, Australia and New Zealand at J.P. Morgan

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Amy C. Edmondson

Novartis Professor of Leadership and Management, Harvard Business School

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Keynote 8 – Navigating the energy transition: opportunities, investor strategies and policy needs

Amy C. Edmondson is the Novartis Professor of Leadership and Management at the Harvard Business School, a chair established to support the study of human interactions that lead to the creation of successful enterprises that contribute to the betterment of society.

Edmondson has been recognized by the biannual Thinkers50 global ranking of management thinkers since 2011, and most recently was ranked #1 in 2021 and 2023; she also received that organization’s Breakthrough Idea Award in 2019, and Talent Award in 2017.  She studies teaming, psychological safety, and organisational learning, and her articles have been published in numerous academic and management outlets, including Administrative Science Quarterly, Academy of Management Journal, Harvard Business Review and California Management Review. Her 2019 book, The Fearless Organization: Creating Psychological Safety in the Workplace for Learning, Innovation and Growth (Wiley), has been translated into 15 languages. Her prior books – Teaming: How organizations learn, innovate and compete in the knowledge economy (Jossey-Bass, 2012), Teaming to Innovate (Jossey-Bass, 2013) and Extreme Teaming (Emerald, 2017) – explore teamwork in dynamic organisational environments. In Building the future: Big teaming for audacious innovation (Berrett-Koehler, 2016), she examines the challenges and opportunities of teaming across industries to build smart cities. 

Edmondson’s latest book, Right Kind of Wrong (Atria), builds on her prior work on psychological safety and teaming to provide a framework for thinking about, discussing, and practicing the science of failing well. First published in the US and the UK in September, 2023, the book is due to be translated into 24 additional languages, and was selected for the Financial Times and Schroders Best Business Book of the Year award.

Before her academic career, she was Director of Research at Pecos River Learning Centers, where she worked on transformational change in large companies. In the early 1980s, she worked as Chief Engineer for architect/inventor Buckminster Fuller, and her book A Fuller Explanation: The Synergetic Geometry of R. Buckminster Fuller (Birkauser Boston, 1987) clarifies Fuller’s mathematical contributions for a non-technical audience. Edmondson received her PhD in organisational behavior, AM in psychology, and AB in engineering and design from Harvard University.

 

Daniel Mulino MP

Assistant Treasurer and Minister for Financial Services

Sessions

Keynote 8 – Navigating the energy transition: opportunities, investor strategies and policy needs

Born in Brindisi, Italy, Daniel was a young child when he moved with his family to Australia. He grew up in Canberra and completed his first degrees – arts and law – at the ANU. He then completed a Master of Economics (University of Sydney) and a PhD in economics from Yale.

He lectured at Monash University, was an economic adviser in the Gillard government and was a Victorian MP from 2014 to 2018. As Parliamentary Secretary to the Treasurer of Victoria, Daniel helped deliver major infrastructure projects and developed innovative financing structures for community projects.

In 2018 he was preselected for the new federal seat of Fraser and became its first MP at the 2019 election, re-elected in 2022 and 2025. From 2022 to 2025, Daniel was chair of the House of Representatives’ Standing Economics Committee in which he chaired inquiries; economic dynamism, competition and business formation and insurers’ responses to 2022 major floods claims.

In 2025, he became the Assistant Treasurer and Minister for Financial Services.

In August 2022, Daniel published ‘Safety Net: The Future of Welfare in Australia’, which aims to explore the ways in which an insurance approach can improve the effectiveness of government service delivery.