Journal article
The effect of investor service costs on mutual fund performance
The Financial review (Buffalo, N.Y.), Vol.58(1), pp.91-115
02/01/2023
DOI: 10.1111/fire.12316
Abstract
We examine the effect of investor service costs on mutual fund performance. Benchmarking passive funds against ETFs managed by the same fund company with the same investment objectives, we show that passive funds on average underperform ETFs by 42 bps in annualized net returns, of which about 90% can be attributed to investor service costs. Further benchmarking active funds against passive funds, we show that active funds on average outperform passive funds by 31 bps in annualized gross returns. However, the higher expense ratios charged by active funds lead to about 28 bps of underperformance in annualized net fund returns.
Details
- Title: Subtitle
- The effect of investor service costs on mutual fund performance
- Creators
- George J. Jiang - Washington State UniversityTong Yao - University of IowaGulnara R. Zaynutdinova - West Virginia University
- Resource Type
- Journal article
- Publication Details
- The Financial review (Buffalo, N.Y.), Vol.58(1), pp.91-115
- Publisher
- Wiley
- DOI
- 10.1111/fire.12316
- ISSN
- 0732-8516
- eISSN
- 1540-6288
- Number of pages
- 25
- Language
- English
- Date published
- 02/01/2023
- Academic Unit
- Finance
- Record Identifier
- 9984380530902771
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