Just a few weeks after George W. Bush and other world leaders descended on Sydney for an Asia-Pacific regional summit, the Australian city was this week plagued by another swarm of irritating visitors.

This time it was millions of Bogong moths, passing through Sydney during their annual southern migration from Queensland to cooler parts of eastern Australia.

For the record, the insects seemed to take a particular liking to Chifley Tower, located in the heart of Sydney’s business district and home to financial institutions including UBS and Morgan Stanley.

I learn via Google that, to escape the summer heat, the Bogong commute up to 1000km – plucky stuff from creatures with a wingspan of under 5cm.

The preparedness of the Bogong to travel long distances got me thinking about another bunch of natives with wanderlust: Australia’s fund managers.

This sub-section of Antipodean humanity has long been criticised for adopting an insular approach to investments, by overly favouring domestic ahead of overseas markets.

But the money managers have started to look seriously to the expanse that lies beyond their existing horizon, a move that is expected to alter the mergers and acquisitions mindset of Australia’s leading companies.

It was only a few years ago that investors would head for the hills if an Australian chief executive dared mention the phrase “overseas acquisition”. Some companies, including Foster’s, the brewer, and National Australia Bank, embarked on exotic forays to the bitter regret of shareholders.

Hence the focus on domestic stocks. This approach has proved lucrative for investors, with the economy now into its 16th consecutive year of growth and the benchmark equity index hitting record highs.

However, domestic fund managers are having to step up their engagement with the wider world, largely thanks to the rapid accumulation of pension savings.

Australia, a country with a population of 21m, has a pensions mountain of $900bn, the fourth-largest such pool in the world. By 2015, this amount is forecast to climb above $2,000bn – which would make it second only to the US.

The savings mountain is a legacy of the 1990s policy reforms led by Paul Keating, Australia’s last Labour prime minister, who more than a decade ago forced through an enhanced system of compulsory savings for workers called superannuation.

The strong economic growth has led to higher-than-expected receipts into super funds, which money managers are struggling to invest in over-heated local markets.

The result is that ever increasing amounts of this pension money are being allocated to international equities and overseas assets.

According to Axiss Australia, the state investment agency, in March 2002 industry super funds allocated 18.4 per cent of their total assets to international equities. Five years later, this had climbed to 24.4 per cent. Less than a third of the total assets of super funds are now invested in Australian-listed stocks.

Investment teams of the super funds are now regular visitors to places such as China, researching where to place their extra investment dollars.

Super funds are even making their presence directly felt in large overseas acquisitions: note that seven of them clubbed together to take an 18 per cent stake in the consortium that last week paid £4.2bn($8.6bn) for Southern Water, the UK utility.

Dealmakers in Australia have latched on to this changing mindset, believing that companies with overseas ambitions will have an easier ride from its shareholder base.

One investment banker told me domestic institutions were “warming” to the idea that some of Australia’s leading companies, desperate to escape a saturated home market, would need to look to Asia and beyond in the search for growth.

The march of the super funds is being closely monitored at the Australian Securities Exchange. The primary focus of the ASX is to develop sexy new products to attract business from domestic institutions, rather than seeking greater links with rival exchanges in the region. The Axiss Australia figures also show that super funds’ allocation to alternative assets such as private equity, infrastructure and hedge funds increased from 7 per cent to 15.1 per cent in the five years to March 2007.

The shift in emphasis has its risks, though. In the move to diversify into new stocks and increase allocation to alternative assets, super funds would be wise to appreciate the potential for foul-ups.

The migration ritual of the Bogong involves them turning round when summer ends to return whence they came.

There are many corporate chiefs in Australia who are hoping the recent decision by the country’s fund managers to invest more overseas does not prove equally ephemeral.

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