43 Pages Posted: 23 Aug 2017 Last revised: 5 Sep 2017
Date Written: August 22, 2017
Individual investors increasingly trade and hold mutual funds via investment platforms, many of which make their own fund recommendations. Using data from leading platforms in the U.K., we examine the drivers, impact, and performance of these recommendations. Platforms’ recommendations favor funds with a low cost to investors, but also favor affiliated funds and those which share more of their commission revenues with platforms. Recommendations affect flows considerably, although investors somewhat discount recommendations of affiliated funds. Recommended funds outperform non-recommended funds overall, but recommended affiliated funds do not.
Keywords: Mutual Funds, Investment Platforms, Recommendations
JEL Classification: G11, G20
Suggested Citation: Suggested Citation
Cookson, Gordon and Jenkinson, Tim and Jones, Howard and Martinez, Jose Vicente, Best Buys and Own Brands: Investment Platforms’ Recommendations of Mutual Funds (August 22, 2017). Saïd Business School WP 2017-14. Available at SSRN: https://ssrn.com/abstract=3024128