Issues in Mutual Fund Economies of Scale

2013 ◽  
Author(s):  
John A. Haslem
2019 ◽  
Vol 24 (3) ◽  
pp. 579-613 ◽  
Author(s):  
Markus Leippold ◽  
Roger Rueegg

Abstract To explore the rationality and competitiveness of the mutual fund industry, we analyze the alpha of active and index mutual funds from a global sample of more than 60,000 equity and fixed income funds and test the null hypothesis that alphas to investors are zero. We distinguish between institutional and retail investors since there are significant differences in management fees, economies of scale, and information asymmetries between these two groups. Using a new robust statistical test, we cannot reject our null hypothesis for the majority of investment categories. We find that the average active fund has less exposure to traditional risk factors, but higher sensitivity to alternative risk premia. Fund persistence and the impact of size and fees add further support to our conclusion that the mutual fund industry is highly competitive, except for US domestic funds. This set of funds is excessively overfunded compared with other fund categories.


2014 ◽  
Vol 3 (1) ◽  
pp. 292-307
Author(s):  
Gerasimos G Rompotis

This paper examines the factors that affect performance, expense ratios and flows of Greek equity mutual funds during 2002-2005 and provides possible explanations for the rare phenomenon of a stagnated mutual fund market in the midst of growing capital markets in Greece and elsewhere. Results demonstrate strong economies of scale for expenses, a negative relationship between performance and expense ratio, funds flow reduction (increase) with increases in expenses (fund age and fund family), and a significant unexplained portion of funds flows. Also discovered is the inadequate competition due to large load fees and expense ratios of two to three times greater than those in other developed markets and a tradeoff between expense ratio and performance of 1.45 instead of 1 which has been observed in the literature.


This article examines the determinants of cost efficiencies in the U.S. commodity mutual fund industry from 2001 to 2016. Empirical results show that cost increases in the U.S. commodity mutual fund industry have been less than proportional to increases in fund assets, pointing to economies of scale for the industry. Average cost elasticity varies by fund size, existence of 12b-1 fees, load versus no-load funds, and institutional versus retail funds. Funds without a 12b-1 plan show larger economies of scale than funds with a 12b-1 plan. Institutional funds show greater economies of scale than retail funds since 2010.


CFA Digest ◽  
2000 ◽  
Vol 30 (2) ◽  
pp. 78-80
Author(s):  
Frank T. Magiera

2021 ◽  
Vol 18 (2) ◽  
pp. 298-311
Author(s):  
Samira Ben Belgacem ◽  
Wafa Ghardallou ◽  
Razan Alshebel

The study examines if specific characteristics of funds influence the performance of Saudi equity mutual funds. Previous research has explored various aspects of mutual funds. However, the Saudi Arabia literature focuses on evaluating the funds’ performance. Hence, this study seeks to close this gap by providing a framework to explain the equity fund performance. Several risks adjusted performance measures are applied such as Jensen’s alpha, lower partial moment alpha, Sharpe ratio, LPM-Sharpe ratio using the dynamic panel specification over the period 2010–2019. Based on the LPM alpha, the risk-adjusted return analysis reveals that the Saudi equity funds outperformed their benchmark over the full sample period. The empirical results show that major fund-specific characteristics such as fund size, past performance, and flow explain future performance. Besides, the evidence confirms that Saudi funds benefit from the economies of scale and expertise, while funds requiring higher levels of initial investment tend to exhibit lower performance levels. These findings provide investors and fund managers with useful information to make the optimal investment decisions in the mutual fund industry.


2019 ◽  
Vol 54 (5) ◽  
pp. 58
Author(s):  
Preeta Sinha ◽  
Tamal Taru Roy ◽  
Debi Prasad Lahiri
Keyword(s):  

2012 ◽  
Vol 3 (7) ◽  
pp. 67-69
Author(s):  
J. Lilly J. Lilly ◽  
◽  
Dr. D.Anusuya Dr. D.Anusuya

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