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A cross-sectional analysis of Malaysian unit trust fund expense ratios

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  • Soo-Wah Low

    (Graduate School of Business, National University of Malaysia)

Abstract

This study examines the determinants of fund expense ratio in a cross-sectional sample of Malaysian unit trust funds. Since fund performance is a key decisive factor for many investors in selecting mutual funds, and given that fund expenses are an important determinant of fund returns, the information on what factors affect fund expense ratio is becoming more relevant than ever for investors when selecting a fund. The results show that larger funds have lower expense ratios than smaller funds, suggesting the presence of economies of scale. There is also evidence of economies of scope in that funds that belong to a large fund family are found to have low expense ratios. The findings further indicate that funds with high returns volatility are associated with low expense ratios and that high portfolio turnover leads to high expense ratio. There is no evidence that fund objective and fund age are related to fund expense ratio.

Suggested Citation

  • Soo-Wah Low, 2008. "A cross-sectional analysis of Malaysian unit trust fund expense ratios," Journal of Asset Management, Palgrave Macmillan, vol. 9(4), pages 270-277, October.
    • Handle: RePEc:pal:assmgt:v:9:y:2008:i:4:d:10.1057_jam.2008.25
    DOI: 10.1057/jam.2008.25
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    References listed on IDEAS

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    1. Muhammad Asad & Danish Ahmed Siddiqui, 2019. "Determinants of Mutual Funds Performance in Pakistan," International Journal of Social and Administrative Sciences, Asian Economic and Social Society, vol. 4(2), pages 85-107, June.
    2. Tan Boon Pin & Noraani Mustapha & Nik Maheran Nik Muhammad, 2019. "The Measurement of Behavioral Factors on Choice of Fund in Unit Trust Fund Investment: An Exploratory Factor Analysis," Eurasian Journal of Social Sciences, Eurasian Publications, vol. 7(1), pages 24-33.

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