Why scale hides inefficiency, why governance suppresses outcomes, and why execution matters more than policy
Australia’s superannuation system is enormous – over AUD 3.5 trillion in assets – yet much of its investment function remains constrained by compliance, benchmarking, and outsourced execution.
That is the blind spot.
Many super funds underperform not because of asset allocation, but because governance, execution, and risk frameworks are designed to avoid deviation rather than optimise outcomes.
Benchmark-hugging, static strategic asset allocations, and rigid decision structures suppress tactical flexibility, create execution drag, and leave risk unmanaged rather than priced. FX is hedged mechanically. Derivatives are underused or pushed offshore. Collateral is handled reactively. Illiquidity risk is masked by diversification instead of being controlled.
The funds that outperform do something fundamentally different. They integrate investment, risk, treasury, and execution. They treat capital, liquidity, and risk as dynamic variables, not reporting artefacts.
The solution is not more risk. It is reframing the superannuation investment office as a capital steward rather than a compliance function – with internal capability, execution authority, and capital-aware decision-making aligned to member outcomes.
This is about scale without control, governance without execution, and how super funds close the gap.
Read the practitioner paper
The 3 Trillion Dollar Blindspot – Rethinking Superannuation’s Investment Function