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>>Australia has also squandered opportunity in its retirement system: 2.6 trillion in high fee individual accounts (1% given away to the financial sector in fee

>>Australia has also squandered opportunity in its retirement system: 2.6 trillion in high fee individual accounts (1% given away to the financial sector in fees every year!) instead of in a sovereign wealth fund like Norway's with a fraction of the admin costs. There are advantages to having hundreds of thousands of individual accounts over one sovereign wealth fund. The latter is a case of putting all your eggs in one basket. Centralization poses enormous risks. Reducing fees by having a smaller number of fund managers managing a larger amount of capital can also reduce the ROI, as a result of fund managers having to limit their objects of investment to very large companies/projects that can efficiently utilize large capital infusions.

djrobstep 8y ago
Seems to me it's the opposite. The holdings of the Norway fund are more diversified than any given Australian fund, simply because a larger pie can be sliced up into more slices. You can view the Norway fund's holdings on their website: https://www.nbim.no/en/the-fund/holdings/holdings-as-at-31.12.2018/ https://www.nbim.no/en/the-fund/holdings/holdings-as-at-31.1... It seems pretty diversified to me! A larger fund also has advantages for ROI (even putting aside the much lower fees) because you can be a more activist shareholder and invest in more sophisticated ways.
- CryptoPunk 8y ago
  Of course a gigantic fund will be more diversified than any single small fund. But the aggregate diversity of all of the funds that all of the individual accounts invest in will be greater than that of any single fund. >>A larger fund also has advantages for ROI (even putting aside the much lower fees) because you can be a more activist shareholder and invest in more sophisticated ways. Small fund managers are free to invest in large funds to gain these advantages. They have the added advantage of being able to select from smaller cap investment options as well.
deleted 8y ago
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tryptophan 8y ago
Why is this getting downvoted? This is factual information. Large funds cannot invest the same way that smaller ones can. Also, NOBODY pays 1% for investment management anymore. You can open a brokerage account in the US and pay .08%(yes, from private investment companies) and get a very diversified portfolio using standardized funds. I really don't see the benefits of a centralized pension...other than being able to offload payments to future generations, ofcourse.
- djrobstep 8y ago
  > Also, NOBODY pays 1% for investment management anymore. LOL, look it up. This is the average annual fee for super funds in Australia

djrobstep 8y ago

Seems to me it's the opposite. The holdings of the Norway fund are more diversified than any given Australian fund, simply because a larger pie can be sliced up into more slices. You can view the Norway fund's holdings on their website: https://www.nbim.no/en/the-fund/holdings/holdings-as-at-31.12.2018/ https://www.nbim.no/en/the-fund/holdings/holdings-as-at-31.1... It seems pretty diversified to me! A larger fund also has advantages for ROI (even putting aside the much lower fees) because you can be a more activist shareholder and invest in more sophisticated ways.

CryptoPunk 8y ago
Of course a gigantic fund will be more diversified than any single small fund. But the aggregate diversity of all of the funds that all of the individual accounts invest in will be greater than that of any single fund. >>A larger fund also has advantages for ROI (even putting aside the much lower fees) because you can be a more activist shareholder and invest in more sophisticated ways. Small fund managers are free to invest in large funds to gain these advantages. They have the added advantage of being able to select from smaller cap investment options as well.

deleted 8y ago

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tryptophan 8y ago

Why is this getting downvoted? This is factual information. Large funds cannot invest the same way that smaller ones can. Also, NOBODY pays 1% for investment management anymore. You can open a brokerage account in the US and pay .08%(yes, from private investment companies) and get a very diversified portfolio using standardized funds. I really don't see the benefits of a centralized pension...other than being able to offload payments to future generations, ofcourse.

djrobstep 8y ago
> Also, NOBODY pays 1% for investment management anymore. LOL, look it up. This is the average annual fee for super funds in Australia