Superannuation funds have “gambled” and played a role in driving asset prices to unsustainable levels, exposing their members to a bubble that may take decades to deflate, says the academic Steve Keen.

“The superannuation funds have gambled like every other form of investment,” says Keen, an associate professor of economics and finance at the University of Western Sydney and the author of Debunking Economics.

“But because asset prices are at unsustainable levels, superannuation funds have exposed their members to a bubble.”

Australia would be better served if the $1.4 trillion worth of assets managed by superannuation funds invested in industrial infrastructure, says Keen.

Keen spoke to I&T News at the Fiduciary Investors Symposium on the Mornington Peninsula in Victoria, an event organised by Conexus Financial, publisher of I&T News.

“If superannuation funds helped add to the productive capacity of the economy and returned the benefits of their investments to investors through dividends, Australia would be better served,” he says.

Local innovation is not supported by superannuation, says Keen.

He cites world-leading solar power technology that was developed by Australians but had to go overseas for funding.

Keen expects deleveraging to continue for more than a decade, depressing markets and perhaps shrinking the size and number of people working in finance.

“Buy and hold is a recipe for disaster,” he says.

“The markets have potential to go down a lot further,” says Keen.

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