Abstract:

In this article we empirically study the investment preferences, portfolio distribution and returns of the pension investors in Türkiye with an extraordinarily high-quality administrative data with the month-end snapshots in December 2019. To analyze portfolio preferences of the DC pension plan investors we calculate their concentrations on the equity, fixed income and default funds in the portfolios. Results show that there is substantial heterogeneity in the level of pension wealth, the weight of equity and fixed income securities funds, and also the role of default option but portfolio returns. Also, the distribution of return on investments are extremely unequal. The weights of the equity funds in the portfolios are very small. Although the distribution is slightly better for the fixed income funds almost the same pattern is for these portfolios. On the contrary, the portfolio weights of default funds are very high in the portfolios compared to equity and fixed income funds. This shows that stickiness to the default option is widespread for Turkish pension investors as documented by prior literature focusing on some developed countries such as the US and Sweden.

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