Skip to main content

Do Chinese Investors Get What They Don't Pay For? Expense Ratios, Loads, and the Returns to China's Open-End Mutual Funds

Publication ,  Journal Article
Wang, Y; Tower, E
Published in: Economic Research Initiatives at Duke (ERID)
October 27, 2016

In this paper we analyze the performance of China's open-ended mutual funds, using the data of 467 open-ended mutual funds from 60 fund families from January 2010 through April 2015. A paradox emerges. High expense ratios are associated with better performance. Unsurprisingly, in light of studies of US funds, when we benchmark performance against stock indexes with the same style, we find that the performance of most mutual funds does not beat the collection of indexes that most closely track the fund. Also, unsurprisingly, we find fund families with high expense ratios serve investors less well than those with low expense ratios, and, unsurprisingly in light of research on the US mutual fund market, the return reduction is larger than can be accounted for by the difference in expense ratios. Surprisingly, for most mutual funds we find high and similar expense ratios. We rank the mutual fund companies from best to worst, and we name names to help investors pick relatively good fund companies. Investors would earn higher returns by investing in mutual funds with low expense ratios and lower sales loads.

Duke Scholars

Published In

Economic Research Initiatives at Duke (ERID)

Publication Date

October 27, 2016

Issue

231
 

Citation

APA
Chicago
ICMJE
MLA
NLM
Wang, Y., & Tower, E. (2016). Do Chinese Investors Get What They Don't Pay For? Expense Ratios, Loads, and the Returns to China's Open-End Mutual Funds. Economic Research Initiatives at Duke (ERID), (231).
Wang, Y., and E. Tower. “Do Chinese Investors Get What They Don't Pay For? Expense Ratios, Loads, and the Returns to China's Open-End Mutual Funds.” Economic Research Initiatives at Duke (ERID), no. 231 (October 27, 2016).
Wang Y, Tower E. Do Chinese Investors Get What They Don't Pay For? Expense Ratios, Loads, and the Returns to China's Open-End Mutual Funds. Economic Research Initiatives at Duke (ERID). 2016 Oct 27;(231).
Wang, Y., and E. Tower. “Do Chinese Investors Get What They Don't Pay For? Expense Ratios, Loads, and the Returns to China's Open-End Mutual Funds.” Economic Research Initiatives at Duke (ERID), no. 231, Oct. 2016.
Wang Y, Tower E. Do Chinese Investors Get What They Don't Pay For? Expense Ratios, Loads, and the Returns to China's Open-End Mutual Funds. Economic Research Initiatives at Duke (ERID). 2016 Oct 27;(231).

Published In

Economic Research Initiatives at Duke (ERID)

Publication Date

October 27, 2016

Issue

231