Over the past few years a falling stock market together with
increased volatility in financial assets generally have brought the
investment strategies of Australian superannuation fund trustees
into particular focus. This is not just because a portion of
employees' wage and salary incomes must by law be diverted away
from present day consumption into long term savings. Rather, it
occurs because of the manner in which those moneys are deployed:
mainly by defined contribution schemes, where returns are directly
linked to financial market fluctuations.
Recent public commentary has raised the question of whether,
despite this obligatory assumption of long term financial risk by
ordinary workers there has been added a further risk, being a bias
among superannuation fund trustees for investing in Australian
equities, to the exclusion of alternative and potentially less
risky asset classes. If such an 'equity bias' exists, the
question arises as to whether this is a prudent
