Incentive Fees and Mutual Funds  

Oleh:

Elton, Edwin J. ; Blake, Christopher R. ; Gruber, Martin J.

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: The Journal of Finance (EBSCO) vol. 58 no. 2 (Apr. 2003), page 779-804.
Fulltext: p 779.pdf (193.54KB)

Isi artikel

This paper examines the e¡ect of incentive fees on the behavior ofmutual fund managers. Funds with incentive fees exhibit positive stock selection ability, but a beta less than one results in funds not earning positive fees. From an investor’s perspective, positive alphas plus lower expense ratios make incentive- fee funds attractive. However, incentive-fee funds take on more risk than non-incentive-fee funds, and they increase risk after a period of poor performance. Incentive fees are useful marketing tools, since more newcash £ows go into incentive-fee funds than into non-incentive-fee funds, ceteris paribus.

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