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Conference Paper: The effect of Index Funds Competition on Money Management Fees

TitleThe effect of Index Funds Competition on Money Management Fees
Authors
KeywordsMutual Fund Fee
Competition
Index Fund
ETF
Market Segmentation
Investor Behavior
Price Discrimination
Issue Date2014
Citation
The 2014 China International Conference in Finance (CICF 2014), Chengdu, Sichuan, China, 10-13 July 2014. How to Cite?
AbstractThis paper estimates the effect of competition from low-cost index funds on fees in the money management industry. A difference-in-differences analysis exploiting the staggered entry of index funds finds that while actively managed funds sold directly to retail investors reduce fees by six percent, those sold through brokers increase fees by four percent. Additionally, actively managed funds, especially closet indexers, shift away from holding the index portfolio. A market segmentation model illustrates that beyond a price-competition effect, the index fund entry creates a selection effect that isolates the least-price-sensitive investors and results in a price increase for this group.
DescriptionSession: Behavior and Impact of Institutional Investors
Persistent Identifierhttp://hdl.handle.net/10722/212583
SSRN

 

DC FieldValueLanguage
dc.contributor.authorSun, Y-
dc.date.accessioned2015-07-23T06:21:53Z-
dc.date.available2015-07-23T06:21:53Z-
dc.date.issued2014-
dc.identifier.citationThe 2014 China International Conference in Finance (CICF 2014), Chengdu, Sichuan, China, 10-13 July 2014.-
dc.identifier.urihttp://hdl.handle.net/10722/212583-
dc.descriptionSession: Behavior and Impact of Institutional Investors-
dc.description.abstractThis paper estimates the effect of competition from low-cost index funds on fees in the money management industry. A difference-in-differences analysis exploiting the staggered entry of index funds finds that while actively managed funds sold directly to retail investors reduce fees by six percent, those sold through brokers increase fees by four percent. Additionally, actively managed funds, especially closet indexers, shift away from holding the index portfolio. A market segmentation model illustrates that beyond a price-competition effect, the index fund entry creates a selection effect that isolates the least-price-sensitive investors and results in a price increase for this group.-
dc.languageeng-
dc.relation.ispartofChina International Conference in Finance, CICF 2014-
dc.relation.ispartof2014 中国金融国际年会-
dc.rights© 2011 Social Science Electronic Publishing, Inc. All Rights Reserved. For personal & noncommercial use apply only to specific documents and use of specific SSRN-provided statistics and other information.-
dc.rightsCreative Commons: Attribution 3.0 Hong Kong License-
dc.subjectMutual Fund Fee-
dc.subjectCompetition-
dc.subjectIndex Fund-
dc.subjectETF-
dc.subjectMarket Segmentation-
dc.subjectInvestor Behavior-
dc.subjectPrice Discrimination-
dc.titleThe effect of Index Funds Competition on Money Management Fees-
dc.typeConference_Paper-
dc.identifier.emailSun, Y: sunyang@hku.hk-
dc.identifier.authoritySun, Y=rp01938-
dc.description.naturepostprint-
dc.identifier.doi10.2139/ssrn.2432361-
dc.identifier.hkuros245374-
dc.publisher.placeUnited states-
dc.identifier.ssrn2432361-

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