Does high fees matter? Evidence from Thai mutual fund industry

  • Woraphon Wattanatorn Mahidol University International College
  • Sarayut Nathaphan Mahidol University International College
Keywords: Mutual fund, Affiliated fund, Expense ratio, Mutual fund fees JEL, G12, G21, G23

Abstract

In this study, a universal question raised by mutual fund investors– “Does high fees matter?”–is answered. Three evidence are documented. First, the superior mutual fund performances are not reflected in higher fees. Second, the association between mutual fund and commercial bank affects both performances and fee in that the different type of mutual funds –bank-related and non-bank-related funds– charge different fees pertaining different performances. Last, the performances of higher fees charged funds –non-bank-related funds– are similar to those of bank-related fund consistent with the informational advantage hypothesis. Bank-related fund has lower fees observed as lower expense ratio owed to cost benefit from economies of scale. This implies a higher fee paid to mutual funds does not guarantee a superior performance.

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Published
2019-06-14