Why Is Investors' Mutual Fund Market Allocation Far from the Optimum?

42 Pages Posted: 10 Jun 2019

See all articles by Ricardo Laborda Herrero

Ricardo Laborda Herrero

Centro Universitario de la Defensa de Zaragoza

Ramiro Losada

Comision Nacional del Mercado de Valores

Date Written: 2017

Abstract

We analyse the differences between the optimal portfolio of funds that a fully in-formed investor might select and the current structure of the mutual fund markets as characterized by the funds’ risk profile (conservative or aggressive) and target investor type (retail or wholesale). We find that the relationship between fund age, market share and change in total net assets – but not fees – and the optimal portfo-lio of funds depends on the structure of the mutual fund market.

Keywords: optimal portfolio of funds, fund characteristics, risk profile, retail, friction

JEL Classification: G11, G19

Suggested Citation

Laborda Herrero, Ricardo and Losada, Ramiro, Why Is Investors' Mutual Fund Market Allocation Far from the Optimum? (2017). CNMV Working Paper No. 65 (2017), Available at SSRN: https://ssrn.com/abstract=3401676 or http://dx.doi.org/10.2139/ssrn.3401676

Ricardo Laborda Herrero

Centro Universitario de la Defensa de Zaragoza ( email )

Academia General Militar, Ctra. de Huesca, s/n
Zaragoza, Zaragoza 50009
Spain

Ramiro Losada (Contact Author)

Comision Nacional del Mercado de Valores ( email )

c/edison 4
Madrid, Madrid 28006
Spain

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