Mutual fund shareholders

Alexander, Gordon J.; Jones, Jonathan D.; Nigro, Peter J.

doi:10.1016/s1057-0810(99)00023-2

Cited by 129 publications

(89 citation statements)

References 16 publications

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“…The cross section of fees also relates significantly to the cross section of distribution methods. Contractual fees are about the same for broker-and directly-distributed funds, but the directly-distributed funds choose to charge significantly less, consistent with the evidence in Capon, Fitzsimons and Prince (1996) and Alexander, Jones and Nigro (1998) that the investors who arrive through brokers are significantly less price-sensitive.…”

supporting

confidence: 66%

“…We test for the relation first in the panel of retail funds, and then for contrast in a panel of institutional funds. Another potential source of demand-curve variation is the tendency, documented by Capon, Fitzsimons and Prince (1996) and Alexander, Jones and Nigro (1998), for investors with different levels of investing sophistication and knowledge to invest through different distribution channels. Specifically, the more informed and sophisticated invest directly, rather than through brokers.…”

Section: Self-selection and The Cross Section Of Feesmentioning

confidence: 99%

“…One way around this chicken-and-egg problem is to relate fees instead to distribution channels, since they are not effects of past fees and since surveys show significant systematic differences of investor types, especially as relate to price sensitivity, across distribution channels. Capon, Fitzsimons, and Prince (1996) and Alexander, Jones, and Nigro (1998) summarize survey responses of mutual fund investors and argue that investors who arrive through the direct channel appear more price-sensitive than those brought in by a sales force. Funds pricing off the less price-sensitive demand curves should charge more.…”

Section: Cross Sectional Relation Between Fees and Distribution Channelsmentioning

confidence: 99%

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Demand Curves and the Pricing of Money Management

2002

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One reason why funds charge different prices to their investors is that they face different demand curves. One source of differentiation is asset retention: Performance-sensitive investors migrate from worse to better prospects, taking their performance sensitivity with them. In the cross-section we show that past attrition significantly influences the current pricing of retail but not institutional funds. In time-series we show that the repricing of retail funds after merging in new shareholders is predicted by the estimated effect on its demand curve. This result is robust to other influences on repricing, including asset and account-size changes.

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supporting

confidence: 66%

Section: Self-selection and The Cross Section Of Feesmentioning

confidence: 99%

Section: Cross Sectional Relation Between Fees and Distribution Channelsmentioning

confidence: 99%

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Demand Curves and the Pricing of Money Management

2002

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“…Therefore, we conclude that the barriers to enter the stock market are not easily mitigated by professional advice, and that other important factors are at play. 2 We observe a hump-shaped age effect in both stock ownership and equity shares in portfolios. The likelihood of stock ownership, conditional on a host of other explanatory variables, increases with age until age 61, while conditional equity shares peak at around age 50.…”

Section: Introductionmentioning

confidence: 74%

What explains household stock holdings?

Shum

Faig

2006

Journal of Banking & Finance

147

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This is an empirical study of the determinants of stock holdings using data from the U.S. Survey of Consumer Finances from 1992 to 2001. There is a great heterogeneity in the way households form their portfolios. Stock ownership is positively correlated with various measures of wealth, age, retirement savings, and having sought financial advice. It is negatively correlated with holdings of alternative risky investments, such as investments in private businesses, and with the willingness to undertake non-financial investments in the future. While we can predict reasonably well who holds stocks, we have less predictive power about the share of stocks owned by those who hold positive amounts. JEL: G11

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“…Capon et al (1996) and Alexander et al (1998)). For instance, Alexander et al (1998) document that less than 20% of all survey participants were able to give an estimate of the costs associated with their largest mutual fund.…”

Section: Introductionmentioning

confidence: 98%

Financial Literacy and Mutual Fund Investments: Who Buys Actively Managed Funds?

Müller

Weber

2010

Schmalenbach Bus Rev

112

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Using data from an online survey with more than 3,000 mutual fund customers we construct a financial literacy score based on quiz-like statements. Our objective measure of financial literacy is significantly correlated with several socioeconomic and demographic variables. We also document a positive correlation between financial literacy and better than average (BTA) thinking in terms of investment skills. With respect to mutual fund investments, there is mixed evidence on the influence of financial literacy. While more sophisticated participants pay lower front-end loads, are less biased in their past return estimates and less miscalibrated in their return forecasts for their own fund as well as for the whole stock market, no relationship exists between financial literacy and ongoing fund expenses. Moreover, financial literacy has only a slight impact on the decision to buy a passive fund rather than an actively managed fund. Our results indicate that the lack of financial literacy among most mutual fund customers cannot completely explain the growth in actively managed funds over the past. The higher level of BTA among more sophisticated investors is modestly responsible for this finding.

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Mutual fund shareholders

Cited by 129 publications

References 16 publications

Demand Curves and the Pricing of Money Management

Demand Curves and the Pricing of Money Management

What explains household stock holdings?

Financial Literacy and Mutual Fund Investments: Who Buys Actively Managed Funds?

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