Effect of Fund Size on the Performance of Australian Superannuation Funds

Abstract:     
This paper finds that fund size has a positive impact on the performance of not-for-profit superannuation funds, which is evident both in gross returns and in expenses. Larger not-for-profit funds have higher allocations to investments, such as private equity and real estate, where they are likely to have a size-related advantage. Lower investment expense ratios of larger not-for-profit funds suggest that they negotiate more favourable fee schedules with external managers. Larger not-for-profit funds realise substantial operational cost savings. However, fund size does not have a positive impact on the performance of retail superannuation funds.

Number of Pages in PDF File: 36

Keywords: retirement savings, pension funds, investment management, economies of scale

JEL Classification: G11, G23, L25

working papers series