Incentive Fees and Competition
in Pension Funds: Evidence from
a Regulatory Experiment

Hamdani, Assaf; Kandel, Eugene; Mugerman, Yevgeny; Yafeh, Yishay

doi:10.1561/108.00000015

Cited by 12 publications

(2 citation statements)

References 35 publications

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“…In Israel, there are three recent studies on pension funds and one paper on provident funds (Steinberg and Porath, 2013; Kallir and Kaplan, 2015; Eden and Kallir, 2015; Hamdani et al , 2017). However, these studies focus mostly on portfolio performance and do not deal with the performance sensitivity of investor flows.…”

Section: Literaturementioning

confidence: 99%

Behavior of investor flows in Israeli provident funds

Arbaa

Varon

2019

IJMF

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Purpose The purpose of this paper is to study the sensitivity of provident fund investors to past performance and how market conditions, changes in risk and liquidity levels influence the net flows into provident funds by using a unique sample from Israel. Design/methodology/approach The study checks the impact of different levels of fund performance on provident fund flows using three alternative proxies for performance: raw return and the risk adjusted returns based on the Sharpe ratio and the Jensen’s α. The analysis relies on the time fixed effect and fund fixed effect regression models. Findings Results reveal that there exists an approximately concave flow–performance relationship and performance persistence among Israeli provident funds. Israeli provident fund investors are risk averse so they overreact to bad performance both in bull and bear markets. Moreover, liquidity is an important factor to influence the flow–performance curve. The investors’ strong negative response to poor performance and relative insensitivity to outperformance show that provident fund managers are not rewarded for their risk-shifting activities as in mutual funds. Originality/value The authors explore the behavior of investor flows in non-institutional retirement savings funds specifically outside of the USA, which is a topic not properly investigated in literature. Moreover, examining inflows and outflows separately gives the authors a richer understanding of investors in pension schemes. This study also enhances the understanding of the impact of fund liquidity on the flow–performance relationship for the retirement funds segment.

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Section: Literaturementioning

confidence: 99%

Behavior of investor flows in Israeli provident funds

Arbaa

Varon

2019

IJMF

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“…Some recent research focus has therefore been directed to looking at investment costs and a comparison of investment performance in the light of regulations and incentives (e.g. Hamdani et al, ) or to methods to reduce costs, for example via auction systems (e.g. Kurach, Kuśmierczyk and Papla, ).…”

Section: Introductionmentioning

confidence: 99%

Pension scheme fees and charge ratios in 44 countries: A comparative study

Han¹,

Stańko²

2020

Int Social Security Review

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Based on data received from pension supervisory authorities, the article reviews 85 different pension schemes in 44 jurisdictions by looking at fees and charges as well as their legal ceilings and their development since 2014. A key finding is the observed decrease in fees and caps. The article presents jurisdictions according to clusters, i.e. by groups of countries with identical or very similar items already covered by pension fees, and analyses the extent to which various cost and fee elements are covered by fees charged to members. Finally, we calculate charge ratios for each cluster to quantify the impact of fees and charges on pension savings. Occupational defined contribution pension schemes and personal plans linked to employment tend to be much more cost effective than personal schemes that have no direct employment link.Liquid funds/stock funds. The maximum fees on assets of other funds are included in this range.

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