When huge compulsory and/or tax advantaged schemes like Australia’s superannuation system are bolted on the side of equity, credit and/or property markets, they must distort asset values because of the built-in expectation of a never-ending flow of automatic money to those systems.
Superannuation schemes are compelled by the terms of their contracts to continue to pump the contributions into strategies nominated by their clients. Suz isn’t alone in deciding not to change her risk profile. Thus the schemes were unable to respond to market conditions, even if they had predicted a collapse in the price of riskier assets.
If all superannuants had simultaneously decided at the top of the market to covert their holdings into cash, then they may have saved themselves from the horrendous falls they have suffered.
On the other hand, however, such prescience by superannuants would have driven equity, credit and property markets rapidly into the ground. Collapse would have come to those markets, but by a different route.
These superannuation funds are so huge that like a sow when she rolls over she kills her sucklings.