On the choice of superannuation funds in Australia

Langford, Benjamin R., Faff, Robert W. and Marisetty, Vijaya B. (2006) On the choice of superannuation funds in Australia. Journal of Financial Services Research, 29 3: 255-279. doi:10.1007/s10693-006-7628-8

Author Langford, Benjamin R.
Faff, Robert W.
Marisetty, Vijaya B.
Title On the choice of superannuation funds in Australia
Journal name Journal of Financial Services Research   Check publisher's open access policy
ISSN 0920-8550
Publication date 2006-06
Sub-type Article (original research)
DOI 10.1007/s10693-006-7628-8
Volume 29
Issue 3
Start page 255
End page 279
Total pages 5
Place of publication New York, United States
Publisher Springer New York LLC
Language eng
Abstract Using a sample of Australian retail and wholesale superannuation funds to proxy for choice and limited choice alternatives, respectively, we investigate the costs and benefits of providing choice to investors. We find that investors who have choice don't respond to fees. Also, loads - typical of the choice environment - are likely to be a dead-weight loss borne by investors. Employees who involuntarily contribute to (employer) funds, tend to pay the lowest fees. Given these results, the advantages of choice become questionable. Our results show that managers of limited choice funds achieve greater positive abnormal returns than retail fund managers. The analysis of flows provides insight into why choice funds do not perform better than limited choice funds. Investors are not responding to historical performance as predicted.
Keyword Fund choice
Q-Index Code C1
Q-Index Status Provisional Code
Institutional Status Non-UQ

Document type: Journal Article
Sub-type: Article (original research)
Collection: UQ Business School Publications
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Citation counts: Scopus Citation Count Cited 5 times in Scopus Article | Citations
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Created: Mon, 07 Mar 2011, 11:10:09 EST by Karen Morgan on behalf of UQ Business School