The Global Menu of Funds
47 Pages Posted: 9 Sep 2019
Date Written: August 8, 2019
We provide the first aggregate perspective on the evolution of mutual fund offerings worldwide. Applying textual analysis to the names of over 39,000 equity mutual funds sold in 77 different countries between 1931 and 2016, we find that the dimensionality of the fund menu is small: 20 common words appear in over 50% of the fund names, and 10 categories are sufficient to classify over 85% of all funds. Moreover, the menu of funds available in each country converges over time to a common (“global”) menu. We trace this surprisingly simple and uniform process of global menu convergence to the actions of individual fund families who follow similar growth paths: small families start by offering funds with more unique names but progressively conform to the main style categories as they grow. Our results shed new light on the aggregate process of financial innovation and the industrial organization of the asset management industry that appears to produce the same “wholesale” menu around the world.
Keywords: Fund Families, Menu Proliferation, International Markets
JEL Classification: G15, G23, L1
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