Wharton Pension Research Council Working Papers

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Working Paper

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As policymakers seek to enhance the returns paid on participants’ investments in their retirement systems, much attention has focused on the Singaporean Central Provident Fund (CPF) and how professionally-managed unit trusts permitted under the CPFIS scheme fit into the system. This paper begins by indicating the investment choices made available to participants; we also summarize the various transaction costs associated with unit trust investments. Next, we examine the determinants of these costs and investigate which factors have a bearing on the cost structure of unit trusts. Our empirical results show that foreign ownership, active style of management, and equity/balanced funds are associated with higher expenses. The paper concludes with a discussion of policy options to reduce cost associated with CPFIS included unit trusts.


Singapore, CPFIS, transaction costs, policy options

Working Paper Number



Koh is an Associate Professor of Finance at the Singapore Management University; Mitchell is a Research Associate of the NBER, International Foundation of Employee Benefit Plans Professor of Insurance and Risk Management and Executive Director of the Pension Research Council at the Wharton School, University of Pennsylvania and Fong is a doctoral student at the Wharton School.

Copyright/Permission Statement

All opinions are solely those of the authors who acknowledge research support from by the Wharton-SMU Research Center at Singapore Management University, and the Pension Research Council at The Wharton School of the University of Pennsylvania. © 2007 Koh, Mitchell and Fong. © 2007 Pension Research Council. All Rights Reserved.


Without implicating them, we acknowledge helpful assistance and advice from Margaret Lim, Hwee Beng Ong and Mark Wong.

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Economics Commons



Date Posted: 17 December 2019