In this episode of "Wealth and Toil," Luke Laretive and Dylan Pargiter-Green discuss the current state of the Australian superannuation sector.

Investment Management and Internalisation:

- The internalisation of investment management by big super funds. This trend involves hiring fund managers internally rather than using external fund managers, which might lead to mediocrity and lack of competition.

- The capability of these funds to manage the enormous amounts of money effectively and the implications of large funds managing market indexes.

Impact of Index Hugging and Market Distortions:

- How large super funds that predominantly invest in indexes could influence market dynamics significantly, potentially leading to price distortions.

- The concentration of financial power within a few large superannuation funds, comparing their market influence now to the historical influence of major banks.

Investments in Unlisted and Private Assets:

- Recent trend of super funds investing in private, unlisted assets which do not have the same liquidity and transparency as publicly traded assets.

- The valuation of these assets, particularly during market downturns, and the potential risks associated with overvaluation.

Governance and Transparency:

- Issues of governance within these super funds, with a call for more focus on what is often seen as the less exciting aspects of fund management like compliance and safety.

- The necessity for transparency in investment reporting and the importance of accurate, fair market valuations are emphasised.

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