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Italian Open End Mutual Fund Costs

Author

Listed:
  • Anolli, Mario
  • Del Giudice, Alfonso

Abstract

We investigate the costs investors incur when they hold shares of Italian open end mutual funds. The overall explicit cost can range from less than 50 to well over 250 basis points in terms of assets under management. Nevertheless, mutual funds investors seem to be almost unaware of the importance of costs and tend to focus mainly on the net return when making their investment decisions. We measure the overall costs of a large sample of mutual funds managed by Italian intermediaries in the period 2000-2003 and also evaluate the determinants of cost efficiencies for the period 2000-2003.

Suggested Citation

  • Anolli, Mario & Del Giudice, Alfonso, 2008. "Italian Open End Mutual Fund Costs," MPRA Paper 8111, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:8111
    as

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    File URL: https://mpra.ub.uni-muenchen.de/8111/1/MPRA_paper_8111.pdf
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    References listed on IDEAS

    as
    1. D. K. Malhotra & Robert W. McLeod, 1997. "An Empirical Analysis Of Mutual Fund Expenses," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 20(2), pages 175-190, June.
    2. Joseph Golec, 2003. "Regulation And The Rise In Asset-Based Mutual Fund Management Fees," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 26(1), pages 19-30.
    3. Khorana, Ajay & Servaes, Henri, 1999. "The Determinants of Mutual Fund Starts," Review of Financial Studies, Society for Financial Studies, vol. 12(5), pages 1043-1074.
    4. Goetzmann, William N & Peles, Nadav, 1997. "Cognitive Dissonance and Mutual Fund Investors," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 20(2), pages 145-158, Summer.
    5. Narayanan Jayaraman & Ajay Khorana & Edward Nelling, 2002. "An Analysis of the Determinants and Shareholder Wealth Effects of Mutual Fund Mergers," Journal of Finance, American Finance Association, vol. 57(3), pages 1521-1551, June.
    6. Erik R. Sirri & Peter Tufano, 1998. "Costly Search and Mutual Fund Flows," Journal of Finance, American Finance Association, vol. 53(5), pages 1589-1622, October.
    7. Cesari, R. & Panetta, F., 1998. "Style, Fees and Performance of Italian Equity Funds," Papers 325, Banca Italia - Servizio di Studi.
    8. Berkowitz, Michael K. & Kotowitz, Yehuda, 2002. "Managerial quality and the structure of management expenses in the US mutual fund industry," International Review of Economics & Finance, Elsevier, vol. 11(3), pages 315-330.
    9. LaPlante, Michele, 2001. "Influences and Trends in Mutual Fund Expense Ratios," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 24(1), pages 45-63, Spring.
    10. Donald B. Keim & Ananth Madhavan, "undated". "The Cost of Institutional Equity Trades," Rodney L. White Center for Financial Research Working Papers 08-98, Wharton School Rodney L. White Center for Financial Research.
    11. Malhotra, D K & McLeod, Robert W, 1997. "An Empirical Analysis of Mutual Fund Expenses," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 20(2), pages 175-190, Summer.
    12. McLeod, Robert W & Malhotra, D K, 1994. "A Re-examination of the Effect of 12B-1 Plans on Mutual Fund Expense Ratios," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 17(2), pages 231-240, Summer.
    13. Livingston, Miles & O'Neal, Edward S, 1996. "Mutual Fund Brokerage Commissions," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 19(2), pages 273-292, Summer.
    14. repec:fth:pennfi:68 is not listed on IDEAS
    15. Robert W. McLeod & D. K. Malhotra, 1994. "A Re-Examination Of The Effect Of 12b–1 Plans On Mutual Fund Expense Ratios," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 17(2), pages 231-240, June.
    16. Nicolaj Siggelkow, 1999. "Expense Shifting: An Empirical Study of Agency Costs in the Mutual Fund Industry," Center for Financial Institutions Working Papers 99-09, Wharton School Center for Financial Institutions, University of Pennsylvania.
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    Cited by:

    1. Paolo Zagaglia, 2014. "International portfolio allocation with European fixed-income funds: What scope for Italian funds?," Working Paper series 18_14, Rimini Centre for Economic Analysis.

    More about this item

    Keywords

    mutual fund expenses; total expense ratio; mutual fund transaction costs; economies of scale;

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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