School of Business Administration
The Hebrew University, Jerusalem, Israel 91905
Institutional Affiliation: Hebrew University
NBER Working Papers and Publications
|September 2016||Incentive Fees and Competition in Pension Funds: Evidence from a Regulatory Experiment|
with Assaf Hamdani, Eugene Kandel, Yishay Yafeh: w22634
Concerned with excessive risk taking, regulators worldwide generally prohibit private pension funds from charging performance-based fees. Instead, the premise underlying the regulation of private pension schemes (and other retail-oriented funds) is that competition among fund managers should provide them with the adequate incentives to make investment decisions that would serve their clients’ long-term interests. Using a regulatory experiment from Israel, we compare the effects of incentive fees and competition on the performance of three exogenously-given types of long-term savings schemes operated by the same management companies: (i) funds with performance-based fees, facing no competition; (ii) funds with AUM-based fees, facing low competitive pressure; and (iii) funds with AUM-based f...
Published: Assaf Hamdani & Eugene Kandel & Yevgeny Mugerman & Yishay Yafeh, 2017. "Incentive Fees and Competition in Pension Funds: Evidence from a Regulatory Experiment," Journal of Law, Finance, and Accounting, vol 2(1), pages 49-86.