In an Australian first, 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. “The aim of this research is to form a nexus between the finance industry and academia in Australia.”
The research team will determine anomaly-based investment strategies for superannuation funds to identify stock characteristics that can 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.
“We aim to demonstrate how an academically-based approach to tracking peaks and troughs in the stock market can help super funds to optimally invest retirement savings by providing strategies to predict and invest accordingly.”
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 that 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.
“With the current nine per cent employer contributions being increased to 12 per cent over coming years, it is important that we develop a greater understanding of the optimum way to invest people’s retirement savings.”
The three-year research project is jointly funded by the University of Newcastle and funds manager, Platypus Asset Management.
For more information contact: Megan Cunneen, Media and Public Relations, University of Newcastle on 02 4985 4049.