The Components of Mutual Fund Fees

27 Pages Posted: 18 Jul 2008

See all articles by Xiaohui Gao Bakshi

Xiaohui Gao Bakshi

Fox School of Business, Temple University

Miles Livingston

University of Florida - Department of Finance, Insurance and Real Estate

Abstract

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.

Suggested Citation

Gao, Xiaohui and Livingston, Miles B., The Components of Mutual Fund Fees. Financial Markets, Institutions & Instruments, Vol. 17, Issue 3, pp. 197-223, August 2008. Available at SSRN: https://ssrn.com/abstract=1162413 or http://dx.doi.org/10.1111/j.1468-0416.2008.00139.x

Xiaohui Gao (Contact Author)

Fox School of Business, Temple University ( email )

Philadelphia, PA 19122
United States

Miles B. Livingston

University of Florida - Department of Finance, Insurance and Real Estate ( email )

P.O. Box 117168
Gainsville, FL 32611-7168
United States
352-392-4316 (Phone)
352-392-0301 (Fax)

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