Fee Waivers in Money Market Mutual Funds
It is a widespread practice among mutual fund managers to voluntarily waive fees they have a contractual right to claim. The effective fee charged may be substantially less than indicated in expense ratios and may vary over the year despite a constant contractual fee. Retail fund managers use fee waivers to strategically adjust net advisory fees to current realizations in performance and expected fund flows. The paper finds differences in waiving between retail and institutional funds because of differences in the effectiveness of waivers in advancing performance.
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