RT Generic
T1 When cheaper is better: fee determination in the market for equity mutual funds
A1 Gil-Bazo, Javier
A1 Ruiz-Verdú, Pablo
AB In this paper, we develop a model of the market for equity mutual funds that captures three key characteristics of this market. First, there is competition among funds. Second, fund managers' ability is not observed by investors before making their investment decisions. And third, some investors do not make optimal use of all available information. The main results of the paper are that 1) price competition is compatible with positive mark-ups in equilibrium; and 2) worse-performing funds set fees that are greater or equal than those set by better-performing funds. These predictions are supported by available empirical evidence.
YR 2005
FD 2005-06
LK https://hdl.handle.net/10016/113
UL https://hdl.handle.net/10016/113
LA eng
LA eng
DS e-Archivo
RD 27 jul. 2024