Abstract
AbstractUninformed investors preferentially select distribution companies to purchase funds that suit their investment objectives, as they cannot evaluate each product themselves. Thus, their performance depends significantly on the quality of their fund distributors' product portfolios. This study examines whether fund distributors provide better performing funds to investors in return for distribution fees and, whether market‐dominant companies outperform the others. It differs from previous studies by applying distributor‐level as well as fund‐level analyses by calculating the equal‐ and sales‐weighted averages of the funds sold by each distribution company for all performance measures. The results demonstrate that fund distributors do not generate positive abnormal returns against the market; moreover, distributors with superior market power are inferior, except in market timing abilities.
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