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Mutual Fund Fees Around the World

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Author Info

  • Ajay Khorana
  • Henri Servaes
  • Peter Tufano

Abstract

Using a new database, we study fees charged by 46,580 mutual fund classes offered for sale in 18 countries, which account for about 86% of the world fund industry in 2002. We examine management fees, total expense ratios, and total shareholder costs (including load charges). Fees vary substantially across funds and from country to country. To explain these differences, we consider fund, sponsor, and national characteristics. Fees differ by investment objectives: larger funds and fund complexes charge lower fees; fees are higher for funds distributed in more countries and funds domiciled in certain offshore locations (especially when selling into countries levying higher taxes). Substantial cross-country differences persist even after controlling for these variables. These remaining differences can be explained by a variety of factors, the most robust of which is that fund fees are lower in countries with stronger investor protection. The Author 2008. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please e-mail: journals.permissions@oxfordjournals.org, Oxford University Press.

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Bibliographic Info

Article provided by Society for Financial Studies in its journal The Review of Financial Studies.

Volume (Year): 22 (2009)
Issue (Month): 3 (March)
Pages: 1279-1310

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Handle: RePEc:oup:rfinst:v:22:y:2009:i:3:p:1279-1310

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Cited by:
  1. Dimmock, Stephen G. & Gerken, William C., 2012. "Predicting fraud by investment managers," Journal of Financial Economics, Elsevier, vol. 105(1), pages 153-173.
  2. Lang, Gunnar & Köhler, Matthias, 2011. "How does the domiciliation decision affect mutual fund fees?," ZEW Discussion Papers 11-085, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  3. M. Sahoo & Renuka Sane, 2011. "A Regulatory approach to financial product advice and distribution," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2011-029, Indira Gandhi Institute of Development Research, Mumbai, India.
  4. Iannotta, Giuliano & Navone, Marco, 2012. "The cross-section of mutual fund fee dispersion," Journal of Banking & Finance, Elsevier, vol. 36(3), pages 846-856.
  5. Bialkowski, Jedrzej & Otten, Roger, 2011. "Emerging market mutual fund performance: Evidence for Poland," The North American Journal of Economics and Finance, Elsevier, vol. 22(2), pages 118-130, August.
  6. Romana Bangash, 2011. "Evaluation of European Mutual funds Performance," Post-Print halshs-00658484, HAL.
  7. Bob Baldwin, 2008. "The Shift from DB to DC Coverage: A Reflection on the Issues," Canadian Public Policy, University of Toronto Press, vol. 34(s1), pages 29-38, November.
  8. Isabel Abinzano & Luis Muga & Rafael Santamaria, 2010. "Do Managerial Skills Vary Across Fund Managers? Results Using European Mutual Funds," Journal of Financial Services Research, Springer, vol. 38(1), pages 41-67, August.
  9. Amporn SOONGSWANG & Yosawee SANOHDONTREE, 2011. "Equity Mutual Fund: Performances, Persistence and Fund Rankings," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 1(6), pages 27, October.
  10. Han, Jae-Joon & Kang, Kyeong-Hoon & Won, Seungyeon, 2013. "Fund expenses and vertical structures of the fund industry," Economic Modelling, Elsevier, vol. 35(C), pages 856-864.
  11. Ferreira, Miguel A. & Keswani, Aneel & Miguel, Antonio F. & Ramos, Sofia B., 2012. "The flow-performance relationship around the world," Journal of Banking & Finance, Elsevier, vol. 36(6), pages 1759-1780.
  12. Kerstens, Kristiaan & Mounir, Amine & de Woestyne, Ignace Van, 2011. "Non-parametric frontier estimates of mutual fund performance using C- and L-moments: Some specification tests," Journal of Banking & Finance, Elsevier, vol. 35(5), pages 1190-1201, May.
  13. Maffett, Mark, 2012. "Financial reporting opacity and informed trading by international institutional investors," Journal of Accounting and Economics, Elsevier, vol. 54(2), pages 201-220.
  14. Villatoro, Félix, 2009. "The delegated portfolio management problem: Reputation and herding," Journal of Banking & Finance, Elsevier, vol. 33(11), pages 2062-2069, November.
  15. Cambpbell, John Y. & Jackson, Howell Edmunds & Madrian, Brigitte & Tufano, Peter, 2010. "The Regulation of Consumer Financial Products: An Introductory Essay with Four Case Studies," Scholarly Articles 4450128, Harvard Kennedy School of Government.
  16. Jesus Sierra, 2012. "Consumer Interest Rates and Retail Mutual Fund Flows," Working Papers 12-39, Bank of Canada.
  17. Chalmers, John & Kaul, Aditya & Phillips, Blake, 2013. "The wisdom of crowds: Mutual fund investors’ aggregate asset allocation decisions," Journal of Banking & Finance, Elsevier, vol. 37(9), pages 3318-3333.
  18. John Y. Campbell & Howell E. Jackson & Brigitte C. Madrian & Peter Tufano, 2011. "Consumer Financial Protection," Journal of Economic Perspectives, American Economic Association, vol. 25(1), pages 91-114, Winter.
  19. Hammami, Yacine & Jilani, Faouzi & Oueslati, Abdelmonem, 2013. "Mutual fund performance in Tunisia: A multivariate GARCH approach," Research in International Business and Finance, Elsevier, vol. 29(C), pages 35-51.
  20. Mehri, Meryem, 2014. "The Differential Effects of Law, Culture and Political Risk on Fees, Performance and Risk-Taking Behavior of Islamic and Conventional Funds," Economics Papers from University Paris Dauphine 123456789/13099, Paris Dauphine University.
  21. Eric Zitzewitz, 2013. "Retail Securities Regulation in the Aftermath of the Bubble," NBER Chapters, in: Economic Regulation and Its Reform: What Have We Learned?, pages 545-588 National Bureau of Economic Research, Inc.

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