Wednesday, February 11, 2009

Mutual Funds Fees are Too High

This study on mutual funds, Identification And Performance of Equity Mutual Funds with High Management Fees and Expense Ratios by Haslem, Baker and Smith, finds that economies of scale are not generally shared with fund holders because the market lacks the competitive pressures to drive fund expense downward. This is due to product a variety of product differentiation strategies that probably have little correlation to a funds future sucess.

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