Australian super funds, once among the best-performers in the world, have been amongst the worst since the financial crisis began, losing an extraordinary 20 per cent of their value last year and recovering just 1 per cent in the first half of this year.
By contrast funds in the "average" OECD nation lost 11 per cent of their value last year and regained 4 per cent in the first six months of this year.
The Paris-based Organisation for Economic Co-operation and Development singles out Australian funds as the most exposed to the share market during 2008, holding just short of 60 per cent of their funds in equities, many times more than Canada with 31 per cent, Japan with 15 per cent and Germany with 6 per cent.
Only Ireland with 52 per cent of funds in equities and the United States with 46 per cent came close...
A heavy reliance on shares accentuates gains when the share market is rising and accentuates losses when it is falling.
Australian funds had the least invested in government bonds in 2008, in part because the Australian government was debt-free and issued few bonds.
The OECD report, Pension Markets in Focus, says funds with large investments in bonds have "lower but more stable" returns.
It cautions against focusing on a single year's returns and notes that over a longer time-frame countries such as Australia have done well.
During 2007 Australian super funds returned 20 per cent, second only to Greece whose funds grew 40 per cent.
Developed-nation pension funds lost a combined $A5.9 trillion in 2008, $1.6 trillion of which was recovered in the first half of 2009.
The OECD says while the recovery continued in the September quarter it will take some time until the losses are fully recouped.
Published in today's SMH and Age
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