Volume 32 Number 3 March 2008

Are Australian Investors Smart?

Philip Gharghori
Charly Sujoto
Madhu Veeraraghavan

Abstract
This paper examines the smart money effect on Australian superannuation funds. Specifically, we investigate whether Australian investors make smart choices in selecting funds. We build on previous research which shows that sophisticated investors have the ability to invest in funds that subsequently perform well. Our findings deviate from the existing literature in that we fail to uncover supporting evidence for a smart money effect in the Australian superannuation fund industry. However, we do find some evidence of investors who are able to identify funds whose future performance will be poor and who disinvest accordingly. Our findings have serious policy implications, as we show that investors generally are not able to recognise high-performing superannuation funds.


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Keywords
SMART MONEY EFFECT; FUND PERFORMANCE; MOMENTUM; AUSTRALIAN SUPERANNUATION FUNDS.

Contact Details

Philip Gharghori
Charly Sujoto
Madhu Veeraraghavan
Department of Accounting and Finance, Monash University, Clayton Campus, Melbourne,VIC 3800.
Email: Madhu.Veeraraghavan@buseco.monash.edu.au


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