Consequences of the Australian Prudential Regulatory Authority’s Investment Performance Tests

8 Pages Posted: 13 Jul 2021

See all articles by John R. Evans

John R. Evans

Centre for Analysis of Complex Financial Systems

Abdul Razeed

The University of Sydney

Date Written: July 11, 2021

Abstract

The Australian Prudential Regulatory Authority (APRA) has introduced for MySuper products a publicly available comparison of investment performance over three-year rolling periods and will be introducing a similar longer-term comparison under the Your Future Your Super Performance Test. The investment performance will be compared to a reference portfolio. This paper considers the effect of holding illiquid assets and “active” investment management as part of a superannuation fund portfolio and concludes the APRA tests may have undesirable consequences for superannuation fund members.

Keywords: APRA regulation, Investment strategy, Illiquid assets. Member outcomes

JEL Classification: D14, D18, G2,

Suggested Citation

Evans, John R. and Razeed, Abdul, Consequences of the Australian Prudential Regulatory Authority’s Investment Performance Tests (July 11, 2021). Available at SSRN: https://ssrn.com/abstract=3884595 or http://dx.doi.org/10.2139/ssrn.3884595

John R. Evans (Contact Author)

Centre for Analysis of Complex Financial Systems ( email )

PO Box 363
Summer Hill, 2130
Australia

Abdul Razeed

The University of Sydney ( email )

University of Sydney
Sydney, NSW 2006
Australia

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