Did you know that every person with a superannuation fund is part of the largest group of owners of Australia’s equity market and bond (debt) market? Probably not. Most people don’t.
Around 40% of the Australian equity market and 30% of the bond market are owned by institutional investors, who manage our money in superannuation funds and other pooled funds. With more than 70% of adult Australians having some form of superannuation savings, we are a formidable ownership group that is growing all the time.
The same is true of other Western economies. Some 44.9% of the UK’s equity market is owned by pooled accounts, such as UK pension funds, and mutual funds own 24% of the US stock market.
So why is it, that we are becoming more concerned about corporate behaviour but feel less able to influence decision making?
Well, we outsource the management of our money to institutional investors. Institutional investors include the superannuation funds, pension funds and professional asset managers who are sub-contracted to manage our money. Once we invest in funds, it is hard to get information about what they invest in and how active they are on our behalf.
Perhaps it is time we get involved and start asking questions. Making a profit is not a bad thing, but it is important we start weighing up what is the cost of prioritising endless profit growth.
Collectively, we could be more powerful than we think. We could use our power to get companies to manage for our long-term economic and social future again and not for the short-term gains of the stock market.
- Australian assets under management growth leads world (marriedtomoney.wordpress.com)
- CHARTS: Superannuation Funds Have Made The Highest Return In 16 Years (businessinsider.com)