Abstract

http://ssrn.com/abstract=1933057
 
 

Citations



 


 



What Drives Market Share in the Mutual Fund Industry


Ajay Khorana


Georgia Institute of Technology - Finance Area

Henri Servaes


London Business School; Centre for Economic Policy Research (CEPR)

September 1, 2011

Review of Finance, Forthcoming

Abstract:     
This article examines competition and investor behavior in the mutual fund industry for the universe of US mutual funds during 1976-2009. Over this period, industry assets increased by a factor of 200, the number of active fund families quadrupled, and the average market share of a family declined by four-fifths. We find that price competition and product differentiation are both effective strategies in obtaining market share. Families that pass along economies of scale to investors and those that charge lower fees than the competition gain market share, but only if these fees are above average to begin with. Loads and 12b-1 fees, however, have a positive effect on market share, consistent with the use of these types of fees for marketing and distribution. Families that perform better, offer a wider range of products, and start more funds relative to the competition (a measure of innovation) also have a higher market share. Innovation is rewarded more if the new fund is more differentiated from existing offerings. Overall, our evidence suggests that mutual fund families compete effectively along both price and non-price dimensions.

Keywords: mutual funds, market share, price competition, product differentiation

JEL Classification: G23, G21, G28

Accepted Paper Series





Not Available For Download

Date posted: November 1, 2011  

Suggested Citation

Khorana, Ajay and Servaes, Henri, What Drives Market Share in the Mutual Fund Industry (September 1, 2011). Review of Finance, Forthcoming . Available at SSRN: http://ssrn.com/abstract=1933057

Contact Information

Ajay Khorana
Georgia Institute of Technology - Finance Area ( email )
755 Ferst Drive
Atlanta, GA 30332
United States
404-894-5110 (Phone)
404-894-6030 (Fax)
Henri Servaes (Contact Author)
London Business School ( email )
Sussex Place
Regent's Park
London NW1 4SA
United Kingdom
+44 20 7000 8268 (Phone)
+44 20 7000 8201 (Fax)
HOME PAGE: http://faculty.london.edu/hservaes/
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Feedback to SSRN


Paper statistics
Abstract Views: 324

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo1 in 0.281 seconds