When cheaper is better: fee determination in the market for equity mutual funds

In this paper, we develop a model of the market for equity mutual funds that captures three key characteristics of this market. First, there is competition among funds. Second, fund managers' ability is not observed by investors before making their investment decisions. And third, some investors do not make optimal use of all available information. The main results of the paper are that 1) price competition is compatible with positive mark-ups in equilibrium; and 2) worse-performing funds set fees that are greater or equal than those set by better-performing funds. These predictions are supported by available empirical evidence

When cheaper is better: Fee determination in the market for equity mutual funds.

In this paper, we develop a model of the market for equity mutual funds that captures three key characteristics of this market. First, there is competition among funds. Second, fund managers’ ability is not observed by investors before making their investment decisions. Third, some investors do not make optimal use of all available information. The main results of the paper are that (1) price competition is compatible with positive mark-ups in equilibrium, and (2) worse-performing funds set fees that are greater or equal to those set by better-performing funds. These predictions are supported by available empirical evidence.Mutual fund fees; Mutual fund performance; Product quality; Asymmetric information; Bounded rationality;

YET ANOTHER PUZZLE? THE RELATION BETWEEN PRICE AND PERFORMANCE IN THE MUTUAL FUND INDUSTRY

Gruber (1996) drew attention to the puzzle that investors buy actively-managed funds even though, on average, they underperform index funds. We uncover another puzzling fact about the market for actively-managed equity mutual funds: funds with worse before-fee performance charge higher fees. We then conduct a series of robustness checks and find that the apparently anomalous fee-performance relation survives all of them. Finally, we show that this relation may be explained as the outcome of strategic fee setting by mutual funds in the presence of investors with different degrees of sensitivity to performance.

Yet another puzzle? the relation between price and performance in the mutual fund industry

Gruber (1996) drew attention to the puzzle that investors buy actively-managed funds even though, on average, they underperform index funds. We uncover another puzzling fact about the market for actively-managed equity mutual funds: funds with worse before-fee performance charge higher fees. We then conduct a series of robustness checks and find that the apparently anomalous fee-performance relation survives all of them. Finally, we show that this relation may be explained as the outcome of strategic fee setting by mutual funds in the presence of investors with different degrees of sensitivity to performance

WHEN CHEAPER IS BETTER: FEE DETERMINATION IN THE MARKET FOR EQUITY MUTUAL FUNDS

In this paper, we develop a model of the market for equity mutual funds that captures three key characteristics of this market. First, there is competition among funds. Second, fund managers' ability is not observed by investors before making their investment decisions. And third, some investors do not make optimal use of all available information. The main results of the paper are that 1) price competition is compatible with positive mark-ups in equilibrium; and 2) worse-performing funds set fees that are greater or equal than those set by better-performing funds. These predictions are supported by available empirical evidence.

The performance of socially responsible mutual funds: the role of fees and management companies

In this paper, we shed light on the debate about the financial performance of socially responsible investment (SRI) mutual funds by separately analyzing the contributions of before-fee performance and fees to SRI funds' performance and by investigating the role played by fund management companies in the determination of those variables. We apply the matching estimator methodology to obtain our results and find that in the period 1997-2005, US SRI funds had significantly higher fees and better before- and after-fee performance than conventional funds with similar characteristics. Differences, however, were driven exclusively by SRI funds run by management companies specialized in socially responsible investment

Aspect-oriented interaction in multi-organisational web-based systems

Separation of concerns has been presented as a promising tool to tackle the design of complex systems in which cross-cutting properties that do not fit into the scope of a class must be satisfied. Unfortunately, current proposals assume that objects interact by means of object-oriented method calls, which implies that they embed interactions with others into their functional code. This makes them dependent on this interaction model, and makes it difficult to reuse them in a context in which another interaction model is more suited, e.g., tuple spaces, multiparty meetings, ports, and so forth. In this paper, we show that functionality can be described separately from the interaction model used, which helps enhance reusability of functional code and coordination patterns. Our proposal is innovative in that it is the first that achieves a clear separation between functionality and interaction in an aspect-oriented manner. In order to show that it is feasible, we adapted the multiparty interaction model to the context of multiorganisational web-based systems and developed a class framework to build business objects whose performance rates comparably to handmade implementations; the development time, however, decreases significantly.Comisión Interministerial de Ciencia y Tecnología TIC2000-1106-C02-0

Multi-Party Coordination in the Context of MOWS

Separation of concerns has been presented as a promising tool to tackle the design of complex systems in which cross-cutting properties that do not fit into the scope of a class must be satisfied. In this paper, we show that interactions amongst a number of objects can also be described separately from functionality, which enhances reusability of functional code and interaction patterns. We present our proposal in the context of Multi-Qrganisational Web-Based Systems (MOWS) and also present a framework that provides the infrastructure needed to implement multiparty coordination as an independent aspect

One hundred of cells generations connect the resistance to drugs and the replicative aging mechanisms

There are researchs that reveal a relationship between acquired resistance to antineoplastic drugs and aging. Therefore, the identification of genes involved in senescence could have a potential therapeutic utility for the prediction and/or prevention of resistance to antineoplastic drugs. The aim of this work is to study the relationship between replicative aging and acquired resistance to Cisplatin and Bleomycin in the yeast Saccharomyces cerevisiae.Universidad de Málaga. Campus de Excelencia Internacional Andalucía Tech