Are mutual fund investors in jail?
The absence of investor reaction to the poor performance of mutual funds is a widely reported phenomenon. This paper investigates the role of load costs as an explanation for the phenomenon and concludes that back-end load fees are an obstacle to reaction. We find that investors with a high likelihood of undergoing a liquidity crisis, preferring liquidity in decision making, act contrary to the reaction hypothesis, and investors with broader investment horizons do not react to poor performances due to the fact that they are “imprisoned” by back-end load fees.
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- Serra, Ana Paula, 2000. "Country and industry factors in returns: evidence from emerging markets' stocks," Emerging Markets Review, Elsevier, vol. 1(2), pages 127-151, September. Full references (including those not matched with items on IDEAS)
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