Dmey Nihul (management fees)
3 min read
Dmey Nihul (דמי ניהול) are the management fees charged on Israeli provident funds, study funds and pension funds. They are the one part of your savings you can influence directly, and they matter far more than most people think. This guide explains the two kinds of fee, the legal limits, how a small fee quietly grows into a large sum, and how to pay less.
What management fees are
When a fund manages your money it charges a fee for the service. The fee is how the investment house or insurer earns its income, and it is taken from your savings automatically, so you never receive a bill for it. Because it is deducted quietly in the background, many people never check what they pay, and paying more than you need to is common.
The two types of fee
There are two separate fees. The first is a fee on the balance, charged every year as a percentage of everything you have saved so far. The second is a fee on deposits, taken from each new payment before it is invested. A fund can charge both. The fee on the balance is usually the more important one, because it applies to your whole accumulated pot, year after year, including the later years when the pot is at its largest.
The legal caps
Regulation sets a maximum for each product. On a provident fund the fee on the balance can be up to 1.05% a year and the fee on deposits up to 4%. Study funds and pension funds have their own separate caps. These are ceilings, not fixed prices: funds compete below them, and what you actually pay depends on your fund and on what you negotiate.
Why a small fee matters so much
A fee that looks small compounds into a large loss, because it is charged every year on a growing balance and the money it takes would otherwise have kept earning returns. Over thirty or forty years of saving, the gap between a fee of 0.3% and a fee of 0.8% can add up to tens of thousands of shekels, and more on a large balance. On a long horizon the fee is often the single biggest thing you can control.
The fee is negotiable
Management fees are not fixed. You can ask your fund for a lower rate, and a larger balance gives you more leverage. Moving your money to a cheaper fund is also allowed and does not create a tax event, so the option to leave is real. Many people who simply ask, or who compare and then switch, end up paying noticeably less for the same kind of product.
How to compare and lower your fees
Look up your own fund and check both fees, then compare them with what other funds charge for the same type of product and the same track. If you are paying close to the cap, treat that as a sign to negotiate or switch. Weigh the fee against the fund's long-term net return, because the cheapest fund is not automatically the best if its returns are weak. You can compare the fees and net returns of every fund on this site using official data.
General information only, not advice. Sources: official Capital Market Authority data and Kol-Zchut.