Are mutual fund investors in jail?
- 7 November 2007
- journal article
- research article
- Published by Taylor & Francis Ltd in Applied Financial Economics
- Vol. 17 (16), 1301-1312
- https://doi.org/10.1080/09603100600970073
Abstract
The absence of investor reaction to the poor performance of mutual funds is a widely reported phenomenon. This article investigates the role of load costs as an explanation for the phenomenon and concludes that back-end load fees are an obstacle to reaction. We found evidence consistent with the hypothesis that medium and long-term investors do not react to poor performances due to the fact that they are ‘imprisoned’ by back-end load fees.Keywords
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