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Unbundling the Expense Ratio: Hidden Distribution Costs in European Mutual Fund Markets

Author

Listed:
  • Marco Navone

    (UTS - University of Technology Sydney)

  • Giacomo Nocera

    (Audencia Business School)

Abstract

Using data on more than 5,000 mutual funds domiciled in four European countries in 2006, we investigate whether distribution costs embedded into the expense ratio can be held responsible for the differences of expense ratios of mutual funds in different countries. We confirm the existence of relevant country effects in the pricing of mutual fund management services. Comparing load and no-load funds and using survey data on fee retrocession to the distribution channel, we provide evidence that these effects are heavily influenced by the cost of the distribution embedded in the expense ratio.

Suggested Citation

  • Marco Navone & Giacomo Nocera, 2016. "Unbundling the Expense Ratio: Hidden Distribution Costs in European Mutual Fund Markets," Post-Print hal-01366161, HAL.
    • Handle: RePEc:hal:journl:hal-01366161
    DOI: 10.1111/eufm.12078
    Note: View the original document on HAL open archive server: https://audencia.hal.science/hal-01366161v1
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    Cited by:

    1. Fernando Muñoz & María Vargas & Ruth Vicente, 2021. "Style-changing behaviour in the socially responsible mutual fund industry: consequences on financial and sustainable performance," Sustainability Accounting, Management and Policy Journal, Emerald Group Publishing Limited, vol. 12(5), pages 1027-1051, February.
    2. Alda, Mercedes & Muñoz, Fernando & Vargas, María, 2022. "Product differentiation in the socially responsible mutual fund industry," Journal of Multinational Financial Management, Elsevier, vol. 64(C).

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