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Conference Paper: The effect of Index Funds Competition on Money Management Fees
Title | The effect of Index Funds Competition on Money Management Fees |
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Authors | |
Keywords | Mutual Fund Fee Competition Index Fund ETF Market Segmentation Investor Behavior Price Discrimination |
Issue Date | 2014 |
Citation | The 2014 China International Conference in Finance (CICF 2014), Chengdu, Sichuan, China, 10-13 July 2014. How to Cite? |
Abstract | This 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. |
Description | Session: Behavior and Impact of Institutional Investors |
Persistent Identifier | http://hdl.handle.net/10722/212583 |
SSRN |
DC Field | Value | Language |
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dc.contributor.author | Sun, Y | - |
dc.date.accessioned | 2015-07-23T06:21:53Z | - |
dc.date.available | 2015-07-23T06:21:53Z | - |
dc.date.issued | 2014 | - |
dc.identifier.citation | The 2014 China International Conference in Finance (CICF 2014), Chengdu, Sichuan, China, 10-13 July 2014. | - |
dc.identifier.uri | http://hdl.handle.net/10722/212583 | - |
dc.description | Session: Behavior and Impact of Institutional Investors | - |
dc.description.abstract | This 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.language | eng | - |
dc.relation.ispartof | China International Conference in Finance, CICF 2014 | - |
dc.relation.ispartof | 2014 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.subject | Mutual Fund Fee | - |
dc.subject | Competition | - |
dc.subject | Index Fund | - |
dc.subject | ETF | - |
dc.subject | Market Segmentation | - |
dc.subject | Investor Behavior | - |
dc.subject | Price Discrimination | - |
dc.title | The effect of Index Funds Competition on Money Management Fees | - |
dc.type | Conference_Paper | - |
dc.identifier.email | Sun, Y: sunyang@hku.hk | - |
dc.identifier.authority | Sun, Y=rp01938 | - |
dc.description.nature | postprint | - |
dc.identifier.doi | 10.2139/ssrn.2432361 | - |
dc.identifier.hkuros | 245374 | - |
dc.identifier.eissn | 1556-5068 | - |
dc.publisher.place | United states | - |
dc.identifier.ssrn | 2432361 | - |
dc.identifier.issnl | 1556-5068 | - |