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Effect of fund size on the performance of Australian superannuation funds
Author(s) -
Cummings James R.
Publication year - 2016
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12110
Subject(s) - diseconomies of scale , closed end fund , business , income fund , fund of funds , diversification (marketing strategy) , finance , passive management , alternative investment , open end fund , private equity , expense ratio , equity (law) , global assets under management , economies of scale , fund administration , institutional investor , transaction cost , market liquidity , corporate governance , marketing , political science , law
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.