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Fee structure, return chasing and mutual fund choice: an experiment

Mikhail Anufriev (), Te Bao, Angela Sutan and Jan Tuinstra ()

No 30, Working Paper Series from Economics Discipline Group, UTS Business School, University of Technology, Sydney

Abstract: We present an experiment that investigates the effect of the fee structure and past returns on mutual fund choice. We find that subjects pay too little attention to the (periodic and small) operation expenses fee, but that the more salient front-end load is used as a commitment device and leads to lock-in into one of the funds. In addition we find that, even when subjects know that future returns are independent of past returns, these past returns are an important determinant of subjects’ investment choices.

Keywords: Mutual fund choice; fee structure; experimental economics; return chasing (search for similar items in EconPapers)
JEL-codes: C91 G02 G11 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2015-04-25
New Economics Papers: this item is included in nep-exp
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Citations: View citations in EconPapers (1) Track citations by RSS feed

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