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Mutual Fund Proliferation and Entry Deterrence

Author

Listed:
  • Sebastien Betermier
  • David Schumacher
  • Ali Shahrad
  • Marcin Kacperczyk

Abstract

Why do so few mutual fund families launch so many funds and styles around the world? We argue that launching numerous funds on an increasingly granular style grid allows incumbent families to congest the product space and deter market entry. Key to this argument is the persistently low dimensionality of the mutual fund product space, a fact we establish by analyzing the names of over 40,000 equity funds sold in 91 countries between 1931 and 2015. Over time, the strategy of filling up the style grid has led to the dominance of few families offering large, granular, and similar fund menus.Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

Suggested Citation

  • Sebastien Betermier & David Schumacher & Ali Shahrad & Marcin Kacperczyk, 2023. "Mutual Fund Proliferation and Entry Deterrence," The Review of Asset Pricing Studies, Society for Financial Studies, vol. 13(4), pages 784-829.
    • Handle: RePEc:oup:rasset:v:13:y:2023:i:4:p:784-829.
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    File URL: http://hdl.handle.net/10.1093/rapstu/raad009
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    More about this item

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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