Excerpt
Excerpt
April 2025, Paper: "This paper investigates the sensitivity of capital flows in defined contribution (DC) pension funds to fund performance, focusing on the switching behavior of individual account holders. Analyzing data from nearly 10 million retirement accounts in Chile and Peru, the study finds that individuals actively switch managers within the same risk profile based on performance. This behavior creates pressure on managers, leading them to potentially shift towards higher-yielding bond holdings in response to outflows. The research highlights the significant impact of individual choices on pension fund portfolio allocation and risk profiles."