New research will assess the performance of the nation’s superannuation funds and formulate optimum investment strategies based on in-depth academic analysis.
The University of Newcastle’s Dr Paul Docherty, Professor Steve Easton and Professor Jim Psaros will collaborate with researchers from the University of Melbourne to examine factors that drive abnormal performance in the Australian stock market.
“In the US, academic research often informs investment practices, however this has not previously been the case in Australia,” Dr Docherty said.
He said the aim of the research was to form a “nexus between the finance industry and academia in Australia”.
The research team would determine investment strategies for superannuation funds to identify stock characteristics that could more closely predict future returns.
“An abnormal return is the difference between the expected return and the actual dividend, sometimes triggered by events like mergers or interest rate rises,” Dr Docherty said.
He added the aim was to demonstrate how an academically-based approach to “tracking peaks and troughs” in the stock market could help super funds to optimally invest retirement savings by providing strategies to predict and invest.
Australians hold more than $1.28 billion in superannuation assets, one of the highest rates per capita of any economy in the world, according to the 2011 Australian Prudential Regulation Authority 2011 Stakeholder Survey.
Dr Docherty said with an ageing population and increasing reliance on superannuation, it was increasingly important fund managers had a solid understanding of the complex factors that contribute to maximising their clients’ returns.
“For most Australians, superannuation is their biggest asset following the family home but few take an active interest in how this important asset is managed,” he said.
The three-year research project is jointly funded by the University of Newcastle and funds manager, Platypus Asset Management.