Asset Allocation Policy, Returns and Expenses of Superannuation Funds: Recent Evidence Based on Default Options

15 Pages Posted: 27 Feb 2014

See all articles by Anup K. Basu

Anup K. Basu

Queensland University of Technology; Financial Research Network (FIRN)

Stephanie Andrews

University of Toronto

Date Written: March 2014

Abstract

We examine the asset allocation, returns and expenses of superannuation funds whose assets are mainly invested in default investment options. A majority of these funds fail to earn returns commensurate with their asset allocation policy. It appears that much of the variation in returns between these funds is a result of engaging in significant active management of assets. Our results indicate that the returns from active management of retail funds are negatively related to expenses, whereas the relationship is positive for industry funds. We also find strong evidence of economies of scale existing in superannuation funds across different size categories.

Suggested Citation

Basu, Anup K. and Andrews, Stephanie, Asset Allocation Policy, Returns and Expenses of Superannuation Funds: Recent Evidence Based on Default Options (March 2014). Australian Economic Review, Vol. 47, Issue 1, pp. 63-77, 2014. Available at SSRN: https://ssrn.com/abstract=2402455 or http://dx.doi.org/10.1111/1467-8462.12040

Anup K. Basu

Queensland University of Technology ( email )

2 George Street
Brisbane, Queensland 4000
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Stephanie Andrews

University of Toronto ( email )

Toronto, Ontario M5S 3G8
Canada

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