Six months on from its Australian pension debut, Vanguard Group Inc.’s report card shows the daunting challenge of taking on a A$3.4 trillion ($2.3 trillion) industry.
(Bloomberg) — Six months on from its Australian pension debut, Vanguard Group Inc.’s report card shows the daunting challenge of taking on a A$3.4 trillion ($2.3 trillion) industry.
The US investment giant has signed up some 10,000 customers for its new fund and amassed more than A$500 million in assets under management, Vanguard Australia Managing Director Daniel Shrimski said in an interview. Still, the numbers rank well below even the smallest funds in the Australian market.
“We are focused on the long term,” Shrimski said. “This is going to take time. We’re happy with the start, but it is just a start.”
Shrimski said that Vanguard saw itself as a “disruptor” in Australia when the pension fund launched in November. The offering was designed to undercut local rivals with competitive fees.
Australia’s biggest pension funds, known as superannuation, are AustralianSuper and Australian Retirement Trust, with each managing well over A$200 billion in assets. The compulsory contributions that guarantee inflows for the world’s fourth largest pensions pot will climb to 12% of workers’ salaries in 2025.
The industry has rapidly consolidated in recent years, with a wave of mergers. The trend is being driven in part by the regulator’s push to shut under-performing funds.
Vanguard was on track to become a “meaningful player” within five years, Shrimski said, and it was “putting itself in a position” to look for mergers. Some 60% of its pension members were aged between 25 and 44, and about a third were existing investment clients, he said.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.