Beware the bond hysteria

5 April 2012 | Shane Oliver, BRW, page 16
There has been much debate recently about whether superannuation funds have too much in shares and not enough in bonds. The basic argument is that compared with other big countries, Australian pension funds have a higher share allocation and a lower bond allocation, at 50 per cent and 18 per cent respectively, which this leaves members exposed when shares plunge. Although the share allocation in super may be relatively high, this does not appear to be the case if Australian households’ total wealth is considered. Thanks to a huge allocation to housing, Australians tend to have a much higher allocation to non-financial assets compared with other countries and a relatively low exposure to shares outside of superannuation.

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