Abstract

http://ssrn.com/abstract=2030102
 
 

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Effect of Fund Size on the Performance of Australian Superannuation Funds


James R Cummings


Macquarie University, Faculty of Business and Economics; Centre for International Finance and Regulation (CIFR)

June 2014

Australian Prudential Regulation Authority Working Paper

Abstract:     
This study examines the relationship between fund size and performance for two major superannuation industry sectors in Australia: retail and not-for-profit, using a unique but confidential database. Results suggest that members benefit from being invested in larger superannuation funds for three reasons: (i) larger not-for-profit funds provide diversification benefits of investing in more asset classes including unlisted property and private equity, (ii) larger funds in both sectors avoid the scale diseconomies in investment returns documented in studies of equity mutual funds, and (iii) larger funds make substantial savings by spreading fixed operating costs (such as IT infrastructure) over a larger asset base.

Number of Pages in PDF File: 33

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

JEL Classification: G11, G23, L25

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Date posted: March 28, 2012 ; Last revised: June 29, 2014

Suggested Citation

Cummings, James R, Effect of Fund Size on the Performance of Australian Superannuation Funds (June 2014). Australian Prudential Regulation Authority Working Paper. Available at SSRN: http://ssrn.com/abstract=2030102 or http://dx.doi.org/10.2139/ssrn.2030102

Contact Information

James R Cummings (Contact Author)
Macquarie University, Faculty of Business and Economics ( email )
Australia
Centre for International Finance and Regulation (CIFR) ( email )
Level 7, UNSW CBD Campus
1 O'Connell Street
Sydney, NSW 2000
Australia

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