Mercer Superannuation to introduce private equity in 2025

Key Takeaways

Geography: Australia.

Analysis

Mercer Superannuation Australia, one of the country’s major retirement funds overseeing AUD75 billion (USD $49 billion) in assets, will introduce private equity to its default pension portfolios for the first time in 2025. The move marks a significant step in Mercer’s asset allocation strategy as Australian superannuation funds deepen exposure to alternative investments.

The fund will target a 5% allocation to private equity within its default MySuper investment option, which automatically enrolls the majority of Mercer’s members. According to Chief Investment Officer Graeme Miller, the allocation will focus primarily on secondary transactions and co-investments, areas seen as offering better pricing and liquidity relative to primary fund commitments.

The decision aligns Mercer with a growing shift across Australia’s AUD4.1 trillion superannuation industry toward alternatives. Colonial First State is also expected to make its debut in private equity this year, while AustralianSuper is finalising mandates with four managers to further expand its own allocation.

Mercer’s entry into private equity is part of a broader portfolio repositioning, where the fund is taking an underweight stance on U.S. equities after a prolonged period of outperformance. CIO Miller noted that current conditions, especially in the secondaries market, present attractive entry points for long-term investors due to discounts on underlying assets amid slow deal activity.

The timing is strategic: global private equity fundraising fell 35% year-on-year in Q1 2025, down to $116 billion according to PitchBook. With fewer deals and a sluggish IPO pipeline, patient institutional capital like Mercer’s may benefit from improved terms and access to high-quality assets.

This move also reflects global best practices, as retirement funds in other OECD nations have steadily increased private market exposure to drive returns and diversify portfolios over long horizons.