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How does the domiciliation decision affect mutual fund fees?

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  • Lang, Gunnar
  • Köhler, Matthias

Abstract

In this paper, we analyze whether the domiciliation decision of mutual funds has an impact on fund fees. To explain the fee price-setting of mutual funds, we consider characteristics specific to funds, fund companies, and countries. We find that fees vary considerably across fund types and countries. Positive impacts of financial market integration can be confirmed, though funds set up under the UCITS directive are more expensive. If funds are sold in multiple countries it drives up fees; however, these higher costs for the investor are outweighed by economies of scale that can be generated if the domiciliation is in a specialized financial center, such as Luxembourg. Larger funds and funds that are set up by specialized or larger fund companies have significantly lower fees.

Suggested Citation

  • Lang, Gunnar & Köhler, Matthias, 2011. "How does the domiciliation decision affect mutual fund fees?," ZEW Discussion Papers 11-085, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:11085
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    Cited by:

    1. Lang, Gunnar, 2012. "Lessons of the financial crisis for the attractiveness of European financial centers," ZEW Discussion Papers 12-080, ZEW - Leibniz Centre for European Economic Research.
    2. Tran-Dieu, Linh, 2015. "How do mutual funds transfer scale economies to investors? Evidence from France," Research in International Business and Finance, Elsevier, vol. 34(C), pages 66-83.
    3. Lang, Gunnar, 2011. "Auswirkungen der Finanzmarktintegration auf Investmentfondsgebühren in der EU," ZEW Wachstums- und Konjunkturanalysen, ZEW - Leibniz Centre for European Economic Research, vol. 14(4), pages 10-11.
    4. Makmun Syadullah & Benny Gunawan Ardiansyah, 2017. "Cost Benefit Analysis the Participation of Indonesia in Asia Region Funds Passport," International Journal of Economics and Financial Issues, Econjournals, vol. 7(3), pages 128-134.

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    More about this item

    Keywords

    Mutual Funds; Financial Regulation; Market Integration;
    All these keywords.

    JEL classification:

    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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