Return on investments for children–Israel’s experience with child development accounts through provident funds

This article examined the past performance of 36 Israeli child development account funds from 12 provident funds managers over three levels of risk for each manager. The results revealed that at times there was a large gap between the fund’s stated level of risk and the actual returns. In most cases, an increase in risk was accompanied by an increase in returns, except for medium-risk managers. Two managers failed to achieve above-average returns in any of their funds, regardless of their levels of risk. Finally, the managers who tended to be successful during periods of negative returns were generally those who sought average returns rather than those who tried for outsized returns. This study’s findings should provide parents with some insights to consider when choosing the child development accounts in which they want to invest.