Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/323028 
Year of Publication: 
2021
Series/Report no.: 
U.S.E. Working Papers Series No. 21-09
Publisher: 
Utrecht University, Utrecht University School of Economics (U.S.E.), Utrecht
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. Scale economies on investment cost still, ranging from 10% for the smaller pension funds to 5% for the largest ones. Performance fees are in particular paid for complex asset categories held by large pension funds. They show strong diseconomies of scale and reduce the traditional scale economy results for the entire portfolio.
Subjects: 
Scale economies
cost elasticity
pension funds
investment costs
efficiency
non-linear cost-size relationship
JEL: 
G23
L10
Document Type: 
Working Paper

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