Australian with retirement savings? You probably own SpaceX

Australian retirement savings are increasingly flowing into US technology companies, including Elon Musk’s SpaceX, as superannuation funds track global indices dominated by a handful of tech giants, according to industry data. The average Australian super portfolio now holds an estimated 12% of its investments in AI-related companies, driven by the rapid expansion of tech stocks in recent years [1]. The so-called “magnificent seven” — Nvidia, Alphabet, Apple, Microsoft, Amazon, Meta, and Tesla — feature prominently in international share portfolios because Australian funds often track global benchmark indices heavily weighted toward the United States, the world’s largest capital market [1]. Mary Delahunty, chief executive of the Association of Superannuation Funds of Australia, said this strategy, combined with broadly diversified portfolios, had delivered average returns in balanced funds of about 10% a year for the past three years [1]. SpaceX entered the picture after making the world’s largest stock market debut to date on 12 June [1]. Despite the scale of the listing, Morningstar senior principal William Anglingdarma said its immediate effect on Australian portfolios would be relatively modest [1]. Asfa estimated the average member’s exposure to SpaceX at about $50, while Australian Retirement Trust, one of the country’s three biggest super funds, put its figure at about $15 per member [1]. SpaceX, utilizing its Falcon family of rockets, launched close to 87% of all upmass on Earth in 2023, underscoring its dominance in the space launch market [2]. The concentration of retirement money in US tech has renewed questions about ethics and risk. Dale Gillham, chief investment analyst at Wealth Within, said super funds may promote an environmental, social and governance responsible investment policy while still holding shares in companies members consider unethical [1]. “Most Australians do not choose to invest in AI directly, yet their retirement savings are increasingly exposed to a small group of US technology companies,” Gillham said [1]. He noted that while the local tech sector makes up just 3% of the ASX, a third of the US market is in tech stocks, and the average balanced fund holder in Australia may have between 7% and 12% of their portfolio exposed to AI and big tech [1]. The five dominant US technology firms — Microsoft, Apple, Alphabet, Amazon, and Meta — alone make up about a quarter of the S&P 500 [8]. Warwick Peel, a responsible AI expert and partner at Amrop Carmichael Fisher, said exposure to AI was now “completely unavoidable” and urged super funds to “really get deep in terms of what is responsible AI” [1]. Peel added: “It’s going to get worse before it gets better. However, I’m an optimist and I honestly believe once we point these machines in the right direction, we’ll be better placed to actually achieve … pro-social AI” [1]. Australian Super and Aware Super did not respond to questions from the Guardian [1].