Variables Impacting Mutual Fund Expense Ratio: The Indian Midcap Mutual Fund Experience
Journal of Contemporary Issues in Business and Government,
2021, Volume 27, Issue 3, Pages 2186-2192
AbstractWith an increase in the number of fund houses entering the asset management business, the Indian Mutual Fund Industry has turned into a competitive marketplace. An increase in the number of schemes translates to increased choice (and confusion) for investors, while for fund managers, it means more pressure to beat the benchmark indices. Correlation research method is used on scheme variables such as Assets Under Management (AUM), Expense Ratio, and the Monthly Returns of select Indian Midcap Schemes for the period January 2016 to 2021 to determine the statistical relationships between the variables. Three schemes from amongst the midcap schemes, after putting them into clusters, are picked for this study. Findings from this research can help fund managers, and Asset Management Companies (AMCs) better manage their schemes by tweaking expenses and further maximizing investor returns.
- AMFI. (2021). What is Total Expense Ratio? https://www.amfiindia.com/investor-corner/knowledge-center/Expense-Ratio.html
- Ban, J. (2015). Effects of Sales Expenses and Management Expenses on Mutual Fund Performance and Flows. Asia-Pacific Journal of Financial Studies, 44(1), 129–173. https://doi.org/10.1111/ajfs.12082
- Benjamin, R. (2020). GST and Mutual Funds in India: A Case Study. 11(5), 179–184.
- Chang, C. E., Krueger, T. M., & Witte, H. D. (2019). Saving green while going green: The role of expenses in socially responsible equity mutual fund selection. Managerial Finance, 45(1), 21–35. https://doi.org/10.1108/MF-03-2018-0095
- Chang, C. E., Krueger, T. M., & Witte, H. D. (2020). Relative Importance of Sustainability Measures and Costs in Mutual Fund Selection. The Journal of Wealth Management, 23(1), 32–46. https://doi.org/10.3905/jwm.2020.1.103
- Coates, IV, J. C., & Hubbard, R. G. (2007). Competition in the Mutual Fund Industry: Evidence and Implications for Policy. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.1005426
- Ellis, J. A., & Underwood, S. (2018). The Only Fund in Town? Geographic Segmentation in the US Mutual Fund Industry: The Only Fund in Town? Financial Management, 47(3), 715–737. https://doi.org/10.1111/fima.12216
- Elton, E. J., Gruber, M. J., & de Souza, A. (2019). Are Passive Funds Really Superior Investments? An Investor Perspective. Financial Analysts Journal, 75(3), 7–19. https://doi.org/10.1080/0015198X.2019.1618097
- Feldman, D., Saxena, K., & Xu, J. (2019). The International Active Fund Management Industry: Concentration Cross Effects. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3330131
- Feldman, D., Saxena, K., & Xu, J. (2020). Is the active fund management industry concentrated enough? Journal of Financial Economics, 136(1), 23–43. https://doi.org/10.1016/j.jfineco.2019.08.009
- Handy, J., Hennessey, J., & Smythe, T. (2020). Class Matters: Analyzing Mutual Fund Class Structure and Expenses. The Journal of Wealth Management, 23(3), 85–97. https://doi.org/10.3905/jwm.2020.1.114
- Haslem, J. A. (2018). The Total Expense Ratio: The Reality of Distribution Fees—“Behind the Mutual Fund Curtain.” The Journal of Wealth Management, Winter 2018, 37–43.
- Johnson, W. F., & Yi, H.-C. (2017). Do target date mutual funds meet their targets? Journal of Asset Management, 18(7), 566–579. https://doi.org/10.1057/s41260-017-0054-7
- LaPlante, M. (2001). INFLUENCES AND TRENDS IN MUTUAL FUND EXPENSE RATIOS. Journal of Financial Research, 24(1), 45–63. https://doi.org/10.1111/j.1475-6803.2001.tb00817.x
- Livingston, M., Yao, P., & Zhou, L. (2019). The volatility of mutual fund performance. Journal of Economics and Business, 104, 105835. https://doi.org/10.1016/j.jeconbus.2019.02.001
- Low, S.-W. (2017). Explaining the expense ratio of international equity funds. American Journal of Business, 32(2), 82–92. https://doi.org/10.1108/AJB-07-2016-0021
- Muñoz, F. (2020). How do the size and independence of the board of trustees affect the financial and sustainable performance of socially responsible mutual funds? Corporate Social Responsibility and Environmental Management, 27(4), 1834–1850. https://doi.org/10.1002/csr.1930
- Parida, S. (2018). Impact of Competition on Mutual Fund Marketing Expenses. International Journal of Financial Studies, 6(1), 29. https://doi.org/10.3390/ijfs6010029
- Park, Y. (2016). The effects of fund commonality in mutual fund families on fund operating expenses and return correlations: Evidence from U.S. equity mutual funds. Financial Services Review, 25(1), 29–49.
- Shah, C., Aadalarasu, M., Saraiwala, P., Mansata, A., & Misra, S. (2019). Measuring performance efficiency of direct vs regular plans of mutual funds in india: A dea approach. 11(4 (Special Issue)), 177–189.
- Stein, R. (2020). Mutual Fund Competition and Fund Manager Strategy Choice. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3713386
- Sun, Y. (2021). Index Fund Entry and Financial Product Market Competition. Management Science, 67(1), 500–523. https://doi.org/10.1287/mnsc.2019.3444
- Vidal-García, J., Vidal, M., Boubaker, S., & Hassan, M. (2018). The efficiency of mutual funds. Annals of Operations Research, 267(1–2), 555–584. https://doi.org/10.1007/s10479-017-2429-z
- Vijaya Kittu, M., & Aruna, P. (2020). Application of Marketing 4.0 Principles By the Indian Mutual Fund Industry. International Journal of Recent Technology and Engineering, 8(5), 3197–3205. https://doi.org/10.35940/ijrte.D9027.018520
- Article View: 102
- PDF Download: 98