The Role of Impersonal Data Disclosure in the Selection of Australian Retail Investment Funds

5 Pages Posted: 18 May 2006

Date Written: 2005

Abstract

The purchase decision for a retail investor is complex, and is based upon multiple attributes derived from impersonal and interpersonal information sources. In this paper we look at the important role that impersonal data disclosure plays in the selection and retention of Australia's 2,637 retail equity investment funds. We find that fund size, past performance, agency ratings, and the management expense ratio (MER) are widely used by retail investors in investment decision making. We conclude that the only disclosure that provides any valuable utility to a retail investor is the MER. As such, the MER should be the key selection criteria for retail investors when making choices regarding investment funds.

Keywords: impersonal data disclosure, retail investment funds, management expense ratio

JEL Classification: M41, N27, G20

Suggested Citation

Finch, Nigel, The Role of Impersonal Data Disclosure in the Selection of Australian Retail Investment Funds (2005). Available at SSRN: https://ssrn.com/abstract=902786 or http://dx.doi.org/10.2139/ssrn.902786

Nigel Finch (Contact Author)

Saki Partners ( email )

Australia

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