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

Malhotra, Davinder K. and McLeod, Robert W., Closed-End Fund Expenses and Investment Selection. Available at SSRN:

Davinder K. Malhotra (Contact Author)

Thomas Jefferson University ( email )

Schoolhouse Lane and Henry Avenue
School of Business Administration
Philadelphia, PA 19144
United States

Robert W. McLeod

University of Alabama ( email )

P.O. Box 870244
Tuscaloosa, AL 35487
United States
205-348-8993 (Phone)
205-348-0590 (Fax)

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