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- Title
Do mutual fund managers adjust cost structure in response to financial shocks?
- Authors
Anderson, Nancy Lottridge; Highfield, Michael J.
- Abstract
Many mutual funds pay for the privilege to list on no-transaction fee (NTF) supermarkets, eliminating transaction costs for the shareholder, but evidence suggests this cost is directly related to expense ratios. This study investigates NTF participation of 44,556 unique mutual funds over the global financial meltdown period of 2005-2009 and confirms that NTF participation leads to higher expense ratios. The evidence also shows that continued participation in the NTF program during this period of negative financial shocks is based on the fund's ability to offset the cost of participation by maintaining a high expense ratio or increasing the expense ratio.
- Subjects
MUTUAL funds; FINANCIAL crises; SUPERMARKETS; TRANSACTION costs; BREAK-even analysis
- Publication
Financial Services Review, 2011, Vol 20, Issue 4, p285
- ISSN
1057-0810
- Publication type
Article