Abstract

A mutual fund firm's ability to charge for marketing funds is a function of more than past financial performance. Front-end loads and annual fund marketing charges are in part determined by customer services, whether deferred marketing charges can be imposed, and financial performance. The results imply that, at least in the short run, mutual fund firms should focus relatively more on fund marketing and service-related characteristics of their funds than on financial performance. Mutual fund investors seem to demand high levels of services in exchange for high marketing charges.

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