An investigation of home bias in Superannuation Investment Choices

Australian superannuation funds have increased investment choices available for their members. Fund members can typically choose from a range of ready-made options or select their own asset allocations. Evidence suggests that individuals may display a home bias in these allocations by favouring domestic assets at the expense of international assets. Such a bias may produce a sub-optimal investment. This paper investigates the asset allocations of members of the Government Employees Superannuation Board (GESB), the superannuation fund for Western Australian public sector employees. Asset allocations appear to be in line with a normal allocation to international equity, especially at the time of their first choice. Subsequent choices however appear to be driven more by historical performance of the asset classes offered, rather than by a home bias. 2006 The Economic Society of Australia