The prudential watchdog has warned the country’s major superannuation funds that its investments in private credit are “opaque”, echoing concerns from the corporate regulator amid a surge of money flowing into the high-risk, high-return asset class.

The Australian Prudential Regulation Authority said it was stress testing the $3.9 trillion superannuation industry for “any potential contagion sources”. It said it expected the funds to seek “some level of safety rather than more speculative, niche areas of private finance”, given any investment risk is passed through to members.