Why Do Mutual Fund Expenses Matter?

Nanigian, David

doi:10.2139/ssrn.1977655

Cited by 4 publications

(2 citation statements)

References 26 publications

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“…Mansor et al (2015) has documented that there is no variance between the before-fee performance of equity funds in Malaysia. These findings were validated by Nanigian (2012), in which an insignificant relationship between fund fees and performance among funds with a minimum initial purchase requirement is found. Based on these findings, the following hypothesis is proposed: H4: There is a relationship between mutual fund fee and mutual fund performance.…”

Section: Mutual Fund Feesmentioning

confidence: 71%

Conceptual Framework for the Determinants of Mutual Fund Performance in Malaysia

Hassan

Hussin

2018

J. Fin. Bank. Review

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Objective - The aim of the study is to identify the determinants of mutual fund performance. Mutual funds have grown in the global financial scene since the 1890s. Past studies have examined various issues associated with mutual funds. However, in Malaysia, mutual fund related studies are rather limited. While most global researches observe the determinants of conventional mutual fund performance, the literature in Malaysia focuses only on a comparison of the performance of mutual funds. Hence, this study aims to fill that gap by providing a framework to assess the determinants of mutual fund performance. More specifically, the study proposes a conceptual framework to determine the effect of historical return, fund governance, timing and selection skills on mutual fund performance. The advancement of the study can be found through the use of theory of performance and mutual fund fees as a mediator in determining the performance of mutual fund fees. Methodology/Technique - A quantitative approach based on secondary data will be used in this study. Multivariate regression analysis and structural equation modelling is also used to evaluate the relationship between the variables. Findings - A conceptual framework is proposed based on the Theory of Performance. The model fit and the mediating role of mutual fund fees will be confirmed after the collection of the research data. It is expected that historical return, fund governance, timing and selection skills will affect mutual fund performance and mutual fund fees will mediate the relationship between the two. Novelty – This study will provide a new perspective on mutual fund performance by using the Theory of Performance. In addition, the mediating role of mutual fund fees is further examined in relation to the specified determinants and mutual fund performance. Type of Paper - Review. Keywords: Mutual Funds; Fees; Performance; Mediator; Theory of Performance. JEL Classification: G10, G11, G19.

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Section: Mutual Fund Feesmentioning

confidence: 71%

Conceptual Framework for the Determinants of Mutual Fund Performance in Malaysia

Hassan

Hussin

2018

J. Fin. Bank. Review

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“…For example, Droms and Walker (1995) analyzed equity mutual funds by using a pooled cross-section/time series regression methodology to evaluate the impact of fund characteristics on fund performance. Nanigian (2012) suggests that the adverse relationship between expenses and performance tends to dissipate, specifically for funds that serve sophisticated investors. These findings support the notion that higher expenses might be able to attract managers who can outperform passive indices based on risk-adjusted performance.…”

Section: Introductionmentioning

confidence: 99%

Expense ratios and net alphas of large cap funds

Kaushik,

Boisvert

2023

FSR

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Global equity markets witnessed a tumultuous time-period of decline followed by growth, starting from the early part of 2000 to the beginning of the current period. Investment in actively managed mutual funds also experienced a decent growth over the same period though there were times when investors especially retail investors sat on the sidelines and seemed reluctant to invest in equity funds. This study analyzes the performance of large cap equity funds between January 2000 and December 2013. The main objective is to assess the performance as reflected in the alpha of funds conditioned on expenses. We apply both OLS regression and ranked portfolio approaches to estimate the abnormal performance. Results of this study show that large cap funds underperform against benchmarks after incorporating expenses. Results also suggest that expenses are not the only reason behind their underperformance.

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