The super power of bonds

A properly functioning, liquid corporate bond market may encourage large super funds away from equities over-exposure to fixed interest – something which could, and should, occur without government intervention.

Former federal finance minister Lindsay Tanner may have been overstating the risk of government intervention to correct a perceived bias towards equities within superannuation fund portfolios yesterday but the issue he was highlighting is worthy of further discussion because it contributes to the debate about the need for a developed corporate bond market in Australia.

In a speech to the Ownership Matters conference in Melbourne yesterday Tanner actually approached the issue of the overexposure of super funds to equities from that starting point – the absence of a developed domestic corporate bond market.

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