Fee structure and mutual fund choice: An experiment

IQ and Mutual Fund Choice

This study analyzes IQ’s influence on mutual fund choice. Using a comprehensive dataset of Finnish males, it finds that high-IQ investors are less likely to own balanced funds, actively managed funds, and funds marketed through a retail network. This behavior tends to reduce highIQ investors’ fund fees. Moreover, within each asset class and service category, and controlling for other investor a...

Why Do Retail Investors Make Costly Mistakes? An Experiment on Mutual Fund Choice

Mutual Fund Portfolio Choice in the Presence of Dynamic Flows∗

We analyze the implications of the widely used fixed fraction of funds fees on a mutual fund manager’s portfolio decisions. In our model, a log utility investor is allowed to dynamically allocate capital between an actively managed mutual fund and a locally riskless bond. The optimal fund portfolio is shown to be the one that maximizes the market value of the fees received, and is independent o...

Financial Product Differentiation and Fee Competition in the Mutual Fund Industry

This paper studies how and how much the mutual fund industry increases its fees by differentiating products over the state of nature. To avoid head-to-head competition, mutual fund managers hold different portfolios which yield distinct returns and become star funds alternatively in different market situations. This enables mutual funds to obtain stochastic monopoly power and on average charge ...

Advertising and Market Structure in the US Mutual Fund Industry

This paper empirically investigates the impact of consumer characteristics on firms’advertising choice and resultant market structure by exploiting differences in investor clientele across various segments in the US mutual fund industry. I find that firms that sell directly to consumers exhibit a higher advertising elasticity of demand, higher advertising expenditures, and higher market concent...