American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
The Impact of Shrouded Fees: Evidence from a Natural Experiment in the Indian Mutual Funds Market
American Economic Review
vol. 102,
no. 1, February 2012
(pp. 576–93)
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)Citation
Anagol, Santosh, and Hugh Hoikwang Kim. 2012. "The Impact of Shrouded Fees: Evidence from a Natural Experiment in the Indian Mutual Funds Market." American Economic Review, 102 (1): 576–93. DOI: 10.1257/aer.102.1.576Additional Materials
JEL Classification
- D14 Personal Finance
- G23 Pension Funds; Other Private Financial Institutions; Institutional Investors
- G28 Financial Institutions and Services: Government Policy and Regulation
- O16 Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance