Have scale effects on cost margins of pension fund investment portfolios disappeared?

Jacob Bikker () and Jeroen Meringa

Working Papers from DNB

Abstract: Investment costs of pension funds are crucial for their returns. Consolidation in the pension fund market proceeds continuously, often with cost savings as the main argument. Unused economies of scale in the pension fund investment costs, however, have declined over the years to values close to zero, except for the very small pension funds. This paper investigates investment economies of scale in the Netherlands and pays special attention to the non-linear relationship between investment costs and sizes of pension funds. Furthermore, investment cost margins are disaggregated into three cost types and into six asset categories. Performance fees are in particular paid for complex asset categories held by large pension funds. They reduce the traditional scale economy results for the entire portfolio. Cost savings by consolidation are still possible but are very limited.

Keywords: Scale economies; cost elasticity; pension funds; investment costs; efficiency; non-linear cost-size relationship (search for similar items in EconPapers)
JEL-codes: G23 L0 (search for similar items in EconPapers)
Date: 2021-04
New Economics Papers: this item is included in nep-age
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.dnb.nl/media/n5rlwryt/working_paper_no-_710.pdf

Related works:
Journal Article: Have scale effects on cost margins of pension fund investment portfolios disappeared? (2022)
Working Paper: Have scale effects on cost margins of pension fund investment portfolios disappeared? (2021)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:dnb:dnbwpp:710

Access Statistics for this paper

More papers in Working Papers from DNB Contact information at EDIRC.
Bibliographic data for series maintained by DNB ().