Mutual Fund Proliferation and Entry Deterrence

62 Pages Posted: 9 Sep 2019 Last revised: 24 Nov 2021

See all articles by Sebastien Betermier

Sebastien Betermier

McGill University - Desautels Faculty of Management

David Schumacher

McGill University

Ali Shahrad

McGill University, Desautels Faculty of Management

Date Written: November 23, 2021

Abstract

Why do so few mutual fund families launch so many funds and styles around the World? We posit that launching numerous funds on an increasingly granular style grid allows incumbent families to congest the product space and deter market entry. Key to this argument is the persistently low dimensionality of the mutual fund product space, which we establish by analyzing the names of over 40,000 equity funds sold in 91 countries between 1931 and 2015. Over time, the strategy of filling up the style grid has led to the dominance of few families offering large, granular, and similar fund menus.

Keywords: Fund Families, Fund Proliferation, Entry Deterrence, International Markets

JEL Classification: G15, G23, L1

Suggested Citation

Betermier, Sebastien and Schumacher, David and Shahrad, Ali, Mutual Fund Proliferation and Entry Deterrence (November 23, 2021). Available at SSRN: https://ssrn.com/abstract=3444235 or http://dx.doi.org/10.2139/ssrn.3444235

Sebastien Betermier

McGill University - Desautels Faculty of Management ( email )

1001 Sherbrooke St. West
Montreal, Quebec H3A1G5 H3A 2M1
Canada

David Schumacher (Contact Author)

McGill University ( email )

1001 Sherbrooke St. W
Montreal, Quebec H3A 1G5
Canada
5143984778 (Phone)

HOME PAGE: http://www.davidschumacher.info

Ali Shahrad

McGill University, Desautels Faculty of Management ( email )

1001 Sherbrooke St. West
Montreal
Canada

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