Excellence Provident Funds was Israel’s most expensive provident fund manager in 2005. The company charges its members an average of 1.69% in management fees. Meitav Provident Funds Ltd. was the next most expensive, with average management fees of 1.61%. These two companies were also the most expensive in 2004, even though Excellent’s management fees fell by 6.6% in 2005, and Meitav’s by 14.8%.
Provident funds are allowed to charge maximum management fees of 2%, but most funds charge far less. Actual management fees are derived from a fund member’s bargaining power. Self-employed persons or employees with self-employee status pay high management fees, while large groups pay a significantly lower rate. Management fees determined in current provident fund tenders by large enterprises are in the 0.5-0.8% range.
The average management fees for non-banking entities were 1.49% in 2005, 10% more than in 2004. Insurance companies charge 1.1%, and banks 0.62%. 2005 was the first year since 2001 in which non-banking entities failed to justify their high management fees; the bank-owned funds had a higher average return.
Most private entities increased their management fees in 2005. The biggest increase was at Dash Providence Fund Management Ltd., which raised its management fees from 1.24% to 1.6%. Analyst Exchange and Trading Services increased its management fees by 3.2% to 1.6%.
The banks made almost no changes in their management fees. Bank Leumi (TASE: LUMI) dropped its management fees from 0.71% to 0.61%, while those of First International Bank of Israel (TASE: FTIN1;FTIN5) fell from 0.66% to 0.58%. Sector banks Bank Yahav for Government Employees and Bank Massad charged the lowest management fees -- 0.33%.
Published by Globes [online] - www.globes.co.il - on February 6, 2006