Convenience in the mutual fund industry
I examine the role of convenience in the mutual fund industry. I find that investors pay more for relatively convenient funds, and that the flows to convenient funds are less responsive to performance. These findings suggest that investors do not evaluate mutual funds independently, but rather that investors select a primary fund, likely based on beliefs about managerial ability, and then select funds which are relatively convenient to this primary fund.
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- Jonathan B. Berk & Richard C. Green, 2002.
"Mutual Fund Flows and Performance in Rational Markets,"
FAME Research Paper Series
rp100, International Center for Financial Asset Management and Engineering.
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- Elton, Edwin J. & Gruber, Martin J. & Blake, Christopher R., 2006. "The adequacy of investment choices offered by 401(k) plans," Journal of Public Economics, Elsevier, vol. 90(6-7), pages 1299-1314, August.
- Jeffrey L. Coles & Jose Suay & Denise Woodbury, 2000. "Fund Advisor Compensation in Closed-End Funds," Journal of Finance, American Finance Association, vol. 55(3), pages 1385-1414, 06.
- Cashman, George D. & Deli, Daniel N., 2009. "Locating decision rights: Evidence from the mutual fund industry," Journal of Financial Markets, Elsevier, vol. 12(4), pages 645-671, November.
- Carlin, Bruce I., 2009. "Strategic price complexity in retail financial markets," Journal of Financial Economics, Elsevier, vol. 91(3), pages 278-287, March.
- Jerold B. Warner & Joanna Shuang Wu, 2011. "Why Do Mutual Fund Advisory Contracts Change? Performance, Growth, and Spillover Effects," Journal of Finance, American Finance Association, vol. 66(1), pages 271-306, 02.
- Vikram Nanda, 2004. "Family Values and the Star Phenomenon: Strategies of Mutual Fund Families," Review of Financial Studies, Society for Financial Studies, vol. 17(3), pages 667-698.
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