AJM - Abstracts

Do Past Performance and Past Cash flows Explain Current Cash flows into Retail Superannuation Funds in Australia.

Angela Frino, Richard Heaney and David Service

Abstract

This paper examines the link between current quarter cash flows and both past performance and past cash flows using a sample of Australian retail superannuation fund data (managed growth and managed stable) drawn from the period 1994 to 2000. This is a rapidly growing sector within the superannuation industry and it reflects investment behaviour of smaller investors rather than institutions and large corporations. Using both the Gruber (1996) approach and panel data analysis we find a positive relationship between past performance and current quarter cash flows as well as evidence of persistence in cash flows over time. Panel data analysis also identifies a positive relationship between current net cash flows and past performance and cash inflows as well as a negative relationship between current net cash flows and past outflows. Market wide growth in the retail superannuation sector over the study period does not appear to be driving these results.

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Keywords

RETAIL SUPERANNUATION FUND; FUND PERFORMANCE; FUND CASH FLOWS

Contact Details
Angela Frino
Faculty of Economics and Commerce
School of Finance and Applied Statistics
ANU, ACT, 0200.
Richard Heaney
School of Economics and Finance, Business
RMIT University
Level 12, 239 Bourke Street, Melbourne, VIC, 3000.
E-mail: Richard.Heaney@rmit.edu.au

David Service
Faculty of Economics and Commerce
School of Finance and Applied Statistics
ANU, ACT, 0200.

The authors would like to thank Plan for Life Pty Ltd for providing the fund data used in the analysis.