How Does Simplified Disclosure Affect Individuals' Mutual Fund Choices?

John Beshears, James Choi, David Laibson and Brigitte Madrian

Yale School of Management Working Papers from Yale School of Management

Abstract: We use an experiment to estimate the effect of the SEC’s Summary Prospectus, which simplifies mutual fund disclosure. Our subjects chose an equity portfolio and a bond portfolio. Subjects received either statutory prospectuses or Summary Prospectuses. We find no evidence that the Summary Prospectus affects portfolio choices. Our experiment sheds new light on the scope of investor confusion about sales loads. Even with a one-month investment horizon, subjects do not avoid loads. Subjects are either confused about loads, overlook them, or believe their chosen portfolio has an annualized log return that is 24 percentage points higher than the load-minimizing portfolio.

Date: 2009-05-08, Revised 2009-06-24
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Citations: View citations in EconPapers (2)

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Related works:
Chapter: How Does Simplified Disclosure Affect Individuals' Mutual Fund Choices? (2011)
Working Paper: How Does Simplified Disclosure Affect Individuals' Mutual Fund Choices? (2009)
Working Paper: How Does Simplified Disclosure Affect Individuals' Mutual Fund Choices? (2009)
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