THREE ESSAYS ON THE MUTUAL FUND MARKETPLACE: THE USE OF DISTRIBUTION CHANNELS AND MARKET SEGMENTATION. PDF Download
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Languages : en
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The growth of the mutual fund industry and the accompanying competition among intermediaries should lead to progressively lower costs to shareholders, based on economic theory. This dissertation is comprised of three studies which examine shareholder costs among mutual funds to test this theory. In each study the expense ratios of mutual funds are examined, while one study also includes an examination of commission structures. In Essay 1, the effect of participation in a supermarket No Transaction Fee program on a funds expense ratio is examined. In addition, the change in characteristics of these participants during a difficult market period is studied. Essay 1 finds that NTF participation leads to higher initial expense ratios but that continued participation depends on the programs ability to pay for itself. In Essay 2, market segmentation within the fund industry is examined for this same time period. Essay 2 finds increased market segmentation over a five year period and finds evidence of competitive pricing only among certain segments. Retail investors who invest in no-load funds appear to benefit from competitive pricing more than those who pay commissions. There is evidence of cost shifting during this time period, as funds lower expense ratios but increase commissions. In Essay 3, expense ratios of common funds within state-sponsored defined contribution plans are examined. Essay 3 finds evidence of market segmentation among the various states. Plan size may have some effect on the setting of expense ratios, but the effect does not appear to be economically significant. Number of participants has no significant effect on the expense ratio. State population displays some significance, such that funds actually charge more for larger states. Wealth of the state, on the other hand, may result in lower expense ratios. Overall, competitive pricing within the mutual fund industry is limited to certain market segments and may be dependent on the channel of distribu.
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Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
The growth of the mutual fund industry and the accompanying competition among intermediaries should lead to progressively lower costs to shareholders, based on economic theory. This dissertation is comprised of three studies which examine shareholder costs among mutual funds to test this theory. In each study the expense ratios of mutual funds are examined, while one study also includes an examination of commission structures. In Essay 1, the effect of participation in a supermarket No Transaction Fee program on a funds expense ratio is examined. In addition, the change in characteristics of these participants during a difficult market period is studied. Essay 1 finds that NTF participation leads to higher initial expense ratios but that continued participation depends on the programs ability to pay for itself. In Essay 2, market segmentation within the fund industry is examined for this same time period. Essay 2 finds increased market segmentation over a five year period and finds evidence of competitive pricing only among certain segments. Retail investors who invest in no-load funds appear to benefit from competitive pricing more than those who pay commissions. There is evidence of cost shifting during this time period, as funds lower expense ratios but increase commissions. In Essay 3, expense ratios of common funds within state-sponsored defined contribution plans are examined. Essay 3 finds evidence of market segmentation among the various states. Plan size may have some effect on the setting of expense ratios, but the effect does not appear to be economically significant. Number of participants has no significant effect on the expense ratio. State population displays some significance, such that funds actually charge more for larger states. Wealth of the state, on the other hand, may result in lower expense ratios. Overall, competitive pricing within the mutual fund industry is limited to certain market segments and may be dependent on the channel of distribu.
Author: Zhi Wang
Publisher:
ISBN:
Category : Investments
Languages : en
Pages : 336
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Author:
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Category : Dissertations, Academic
Languages : en
Pages : 568
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Author: Xuemei Guo
Publisher:
ISBN:
Category :
Languages : en
Pages : 312
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This dissertation investigates the determinants of mutual fund flows and mutual fund performance. The first chapter examines the response of fund investors to style volatility and the impact of style volatility on the flow-performance relationship. Three main empirical findings are obtained using both a portfolio approach and a multivariate regression approach. First, I find that there is a significant positive relationship between the style volatility and the subsequent fund flows to mutual funds. This finding can be interpreted as either fund managers having style timing ability or fund managers catering to investors preferences or tastes. Second, the positive relationship between past style volatility and fund flows is less pronounced for funds with superior past performance. Lastly, fund style volatility has a dampening effect on the flow-performance relationship: the flow-performance sensitivity weakens by 12% when the past style volatility increases by one standard deviation. It is likely that performance is perceived as a less informative signal of investment ability for fund managers who follow inconsistent styles over time. The second chapter studies how the response of fund investors to past risk varies over business cycles. I employ the NBER boom indicator, the Consumer Sentiment Index, and the National Activity Index to proxy for economic conditions. I find that mutual fund investors react differently to risk across economic environments. Funds with more volatile past returns discourage fund investors. The investors’ demand for actively managed funds is higher under good market conditions. Fund flows are less responsive to risk during expansionary economic periods. This finding may indicate that fund investors are risk averse and become less risk averse in good market states. The third chapter empirically examines whether mutual fund performance is affected by prior family performance. I propose two testable hypotheses: the information and resource sharing hypothesis and the cross-fund subsidization hypothesis. The empirical findings suggest that there is a significant positive relationship between prior family performance and subsequent fund performance. This finding is consistent with the hypothesis that mutual funds in the same family share informational resources. This positive relation also justifies the finding in the mutual fund flow literature that fund flows are higher for funds with higher past family performance. Furthermore, I find that the predictive power of the prior family performance is stronger in larger fund families.
Author: Diane Del Guercio
Publisher:
ISBN:
Category : Economics
Languages : en
Pages : 43
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We study the impact of investor heterogeneity on mutual fund market segmentation. To motivate our empirical analysis, we make two assumptions. First, some investors inherently value broker services. Second, because brokers are only compensated when they sell mutual funds, they have little incentive to recommend funds available at lower cost elsewhere. The need for mutual fund families to internalize broker incentives leads us to predict that the market for mutual funds will be highly segmented, with families targeting either do-it-yourself investors or investors who value broker services, but not both. Using novel distribution channel data, we find strong empirical support for this prediction; only 3.3% of families serve both market segments. We also predict and find strong evidence that mutual funds targeting performance-sensitive, do-it-yourself investors will invest more in portfolio management. Our findings have important implications for the expected relation between mutual fund fees and returns, tests of fund manager ability, and the puzzle of active management. Furthermore, they suggest that changing the way investors compensate brokers will change the nature of competition in the mutual fund industry -- National Bureau of Economic Research web site.
Author: Ning Ding
Publisher:
ISBN:
Category : Mutual funds
Languages : en
Pages : 318
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Author: Feng Dong
Publisher:
ISBN:
Category : Chief executive officers
Languages : en
Pages : 320
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Author: Dongmin Ke
Publisher:
ISBN:
Category : Investments, Foreign
Languages : en
Pages : 216
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Author: Robert Bork
Publisher:
ISBN: 9781736089712
Category :
Languages : en
Pages : 536
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Book Description
The most important book on antitrust ever written. It shows how antitrust suits adversely affect the consumer by encouraging a costly form of protection for inefficient and uncompetitive small businesses.
Author: Jean-Jacques Lambin
Publisher: Presses univ. de Louvain
ISBN: 9782874631191
Category : Business & Economics
Languages : en
Pages : 198
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Book Description
This essay attempts to structure a forward-looking approach to the evolving role of marketing in today's economy. Many organisations today recognize the need to become more market responsive in the global and interconnected market in which they operate.
