Australia's superannuation system, with assets now exceeding A$4 trillion, has been a structural anchor of demand for ASX-listed equity for two decades. The home-bias of trustee allocations — historically 40–50% of growth assets in Australian equity — was a function of franking credit advantages, governance familiarity, and constraints on offshore execution. Each of those is weakening. Industry funds in particular have shifted international equity allocations above 50% of growth assets, and the implications for ASX liquidity and corporate Australia's cost of capital are starting to show.
Key takeaways
- International equity is now above 50% of growth allocations at the largest industry funds.
- Franking credit advantage has narrowed relative to global return spreads.
- ASX liquidity is structurally lower than five years ago.
- Mid-cap Australian equity is feeling the marginal-buyer absence.
What drove the shift
Returns. The performance of US and global equity through the 2020s exceeded the franking-adjusted return of the ASX, and trustees responded. Internal execution capability at AustralianSuper, Aware, ART and others is now genuinely globally competitive.
- Performance. Global outperformed franked Australian for years.
- Internal capability. Funds run global mandates in-house.
- Currency. AUD weakness has been net helpful.
What it means for Australia
ASX small and mid-cap liquidity is materially lower. New ASX listings are harder to price. The cost of capital for unlisted Australian corporates is no longer naturally cheap relative to global peers.
What it means for global markets
A super-fund-sized incremental buyer of global equity is a non-trivial allocator marginal.
What could reverse it
A material ASX-specific outperformance period — possible but not in line with current trends.
Allocation shift
| Asset class | 2018 | 2026 |
|---|---|---|
| Australian equity | ~30% | ~22% |
| International equity | ~25% | ~35% |
| Private markets | ~12% | ~18% |
| Fixed income | ~22% | ~17% |
Australia's home bias has been a structural feature of the ASX. It is structurally weakening.
Frequently asked questions
Is this politically controversial?
Modestly — there is regulatory interest in domestic deployment.
What about franking credits?
Still valuable; less decisive than they were.
Will the ASX shrink?
Relatively, yes; absolutely, no.
The bottom line
Australian superannuation has globalized. The ASX is feeling it, and corporate Australia is too.
