The Impact of Shrouded Fees: Evidence from a Natural Experiment in the Indian Mutual Funds Market-Reference-Cited by-同舟云学术

The Impact of Shrouded Fees: Evidence from a Natural Experiment in the Indian Mutual Funds Market

Published:2012-02-01 Issue:1 Volume:102 Page:576-593
ISSN:0002-8282
Container-title:American Economic Review
language:en
Short-container-title:American Economic Review

Author:

Anagol Santosh¹,Kim Hugh Hoikwang²

Affiliation:

1. The Wharton School, University of Pennsylvania, Business and Public Policy, 3600 Locust Walk, Philadelphia, PA 19103.

2. The Wharton School, University of Pennsylvania, 3000 Steinberg-Hall Dietrich-Hall, 3620 Locust Walk, Philadelphia, PA 19104.

Abstract

We study a natural experiment in the Indian mutual funds sector that created a 22-month period in which closed-end funds were allowed to charge an arguably shrouded fee, whereas open-end funds were forced to charge entry loads. Forty-five new closed-end funds were started during this period, collecting $7.6 billion US, whereas only two closed-end funds were started in the 66 months prior to this period, collecting $42 billion US, and no closed-end funds were started in the 20 months after this period. We estimate that investors lost and fund firms gained approximately $350 million US due to this shrouding. JEL: D14, G23, G28, O16

Publisher

American Economic Association

Subject

Economics and Econometrics

Link

https://pubs.aeaweb.org/doi/pdf/10.1257/aer.102.1.576

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