No abstract

"A tremendous amount of research examines US mutual funds, but fund markets also thrive in other countries. However, research about these fast growing markets is lacking. This study addresses Finnish funds. Fast growth of the Finnish fund industry, strong bank dominance in the industry and recent EU membership make it an interesting market to examine. The Finnish fund market is also of particular interest since it had the fastest growth among the EU countries during 1996-2000. We find evidence that bank-managed and older funds charge higher expenses but investors are not compensated for paying higher expenses with higher risk-adjusted returns, suggesting a potential agency problem. Overall, Finnish fund expenses have decreased over time, consistent with EU membership reducing market segmentation and generating competition." Copyright Blackwell Publishers Ltd, 2004.

Although the number of mutual funds grew during the 1990s, much of the growth is attributable to the introduction of multiple share class (MS) funds. Proponents argue that the MS structure leads to cost savings, which can be passed onto investors as lower expenses. However, if the structure lowers costs, sponsors are likely to profit from it. Though investors are concerned about the base expense ratio, the sum of administrative and management fees, fund sponsors generate profits from the management fees. As such, they would prefer to increase the management fee if they can simultaneously lower administrative fees. Our results indicate that MS fund investors pay lower administrative fees, but management fees are approximately 7 basis points higher than single-class funds. Overall, base expense ratios are higher than for single-class funds, suggesting fund sponsors capture the cost benefits the MS structure provides. Our results are robust to different model specifications and different estimation techniques. Southern Finance Association and the Southwestern Finance Association.

No abstract

Existing literature demonstrates a positive relationship between advertising and subsequent mutual fund flows. While this relationship is hardly unexpected, it has only been addressed in a limited fashion. This work seeks to explore the issue in greater depth by examining both fixed income and equity funds, by separating load and no-load funds, and by using a richer empirical model. Our findings support the accepted relationship in general, but indicate that the response by investors differs between fund types (equity vs. fixed income) and the direct (no-load) and broker-sold (load) markets. Finally, we provide evidence that earlier findings are contingent upon the sample of funds selected as well as the empirical specification.