Closed-End Fund Expenses and Investment Selection
Posted: 27 Jan 2000
Investment returns on closed-end funds are highly volatile. Because expenses have a definite negative impact on closed-end fund returns, investors should include the expense ratio as a criterion for fund selection in addition to performance, investment objective, and risk of the fund. This paper constructs a model of the expense ratio of closed-end funds to explain cross-sectional differences in the expense ratios for the period between 1989?1996. We relate closed-end fund expenses to fund characteristics and identify the factors that can help investors choose low expense closed-end funds.
JEL Classification: G12, G14
Suggested Citation: Suggested Citation