Mutual Fund Advisory Contracts: An Empirical Investigation

Posted: 15 Nov 2003

See all articles by Daniel Deli

Daniel Deli

Securities and Exchange Commission (SEC)

Abstract

We investigate marginal compensation rates in mutual fund advisory contracts and find the following. Equity and foreign fund advisors receive higher marginal compensation than debt and domestic fund advisors. Advisors of funds with greater turnover receive higher marginal compensation. Also, closed-end fund advisors receive higher marginal compensation than open-end fund advisors. Finally, we find that marginal compensation is lower for advisors of large funds and members of large fund families. We argue that these differences in marginal compensation reflect differences in advisor marginal product, differences in the difficulty of monitoring performance, differences in control environments, and scale economies.

Suggested Citation

Deli, Daniel, Mutual Fund Advisory Contracts: An Empirical Investigation. Available at SSRN: https://ssrn.com/abstract=309156

Daniel Deli (Contact Author)

Securities and Exchange Commission (SEC)

450 Fifth Street, NW
Washington, DC 20549-1105
United States

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