 The economic gain of being small in the mutual fund industry: U.S. and international evidenceTimotheos Angelidis, Vassilios Babalos and Michalis Fessas International Review of Financial Analysis, 2021, vol. 77, issue C Abstract: Motivated by the ongoing debate on the interaction between fund size and fund performance, we investigate the effect of asset growth on fund performance. We explicitly measure the economic gain (loss) of being a small (large) fund by comparing the average performance of a large fund vis à vis its average performance when it was small. Our results reveal that for the U.S. actively managed equity funds, the risk-adjusted return differential amounts to 7.08% per year in favor of small funds. Moreover, we fail to identify any performance loss for a fund relative to its history unless it belongs in the top 70% of fund size. However, the documented implicit performance handicap of U.S. large equity funds is not met in funds investing outside the U.S. Our findings carry important implications for the mutual fund industry and for the fund selection process. Keywords: Fund size; Performance; U.S. mutual funds; International funds (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:77:y:2021:i:c:s1057521921001848 DOI: 10.1016/j.irfa.2021.101852 Access Statistics for this article International Review of Financial Analysis is currently edited by B.M. Lucey More articles in International Review of Financial Analysis from Elsevier |
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