The Components of Mutual Fund Fees
University of Hong Kong - Faculty of Business and Economics
University of Florida - Department of Finance, Insurance and Real Estate
Financial Markets, Institutions & Instruments, Vol. 17, Issue 3, pp. 197-223, August 2008
Several research studies have found that mutual fund expense ratios decline as funds get larger. This paper decomposes the annual expense ratios of actively managed domestic equity funds into their component fees. Most of the observed decline in total expense ratios comes from the small fees paid to outside service providers and the large majority of this decline occurs for the smallest one third of funds. The largest component of the expense ratio, advisory fees, is essentially constant for larger funds. The second largest component, marketing fees, increases as fund assets grow.
Number of Pages in PDF File: 27Accepted Paper Series
Date posted: July 18, 2008
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