chapter  4
32 Pages

Empirical evidence on costs and performance

WithNicholas Morris

This chapter explores empirical evidence on the costs and performance of Australian superannuation funds. The costs and performance relative to benchmark of Australian funds are compared with international funds, using an international database of US, Canadian and European funds. International comparison suggests that Australian funds have performed less well than US, Canadian and European funds. Sensitivity tests show the general finding to persist across various alternative benchmark portfolios and time periods. A key finding from the benchmark modelling is that if the funds had been invested entirely in the Australian stock market, they would now be in excess of $776 billion larger. The Australian Prudential Regulatory Authority (APRA) data is used for the empirical work. The under-reporting of expenses sometimes leads to a mismatch between implied and actual growth in assets, and this is dealt with in the APRA data by 'balancing items'.