Distribution Fees Research Articles

제통전쟁(製通戰爭)과 아모레퍼시픽의 D2C 전략

Retailers and manufacturers aim for price leadership to maximize profits. This aggressive pricing process resembles war. As retailers and manufacturers compete in the consumer products industry, manufacturers' positions are weakened, and AmorePacific faces similar challenges. The paper examines AmorePacific's crisis amid structural changes and the merits and drawbacks of the Direct-to-Consumer (D2C) approach used to overcome it. First, this paper examines the influence of the competition between manufacturers and retailers on the consumer products business and the rise of the D2C model as an alternative. It described AmorePacific's D2C model introduction and its definition and characteristics. There are advantages, such as reducing intermediate distribution fees, securing customer data, and delivering brand value through other companies' D2C cases. Still, risks and limitations exist, such as increased costs, supply chain management burden, and relatively low traffic. The strategic D2C model created from the literature study and case analysis will help AmorePacific and other consumer products companies adapt to market changes and implement D2C strategies. This paper thoroughly examines the pros and cons of the D2C model and advises AmorePacific to make strategic decisions to overcome the crisis in a challenging business environment. It also advises spreading the D2C model to other industries and researching its complementary relationship with the traditional distribution strategy. The consumer products business struggles to determine who should win the 'war ' between manufacturers and retailers to maximize profits.

Analysis of charging tariffs for residential electric vehicle users based on Stackelberg game

Establishing a rational pricing mechanism for electric vehicles (EVs) can incentivize users to engage in charging activities, foster positive consumption behaviors, and indirectly benefit the grid by increasing load demand. Therefore, this paper conducts a Stackelberg game study between the grid and EV users by utilizing real charging and discharging data of EV users in F city. First, the price elasticity of EV users' electricity consumption behavior is analyzed. Second, the Stackelberg game model is constructed, multiple tariff schemes are designed to calculate the equilibrium tariff of the game, and the benefits of the grid and EV users are analyzed in comparison with the tariff policy that will be implemented in F city. Lastly, different seasonal scenarios are constructed to extend the applicability of the research results. It is found that Scheme 3 effectively incentivizes charging load growth, increases cross-subsidies and transmission and distribution fees, and protects the level of charging and discharging costs for residents; furthermore, lowering charging and discharging tariffs during seasons of high price elasticity for residents to increase demand is an optimal strategy for grid pricing.

Intermediaries’ Incentives across Share Classes in the Same Fund

We provide supporting evidence that intermediaries’ incentives vary across retail share classes in the same fund. We find that when a fund has multiple share classes with different distribution fees, flow is less sensitive to poor performance for share classes with higher distribution fees. These results are more pronounced for funds when intermediaries are more inclined to favor one share class over another—specifically, for funds serving only retail investors, having a large dispersion in distribution fees across share classes, or having a share class that charges the maximum allowed distribution fee. Our results hold for funds with small spread in investors’ performance sensitivities and disappear in a placebo test. These findings cannot be explained by differences in share-class load fees or investor clientele.

Optimization Model for EV Charging Stations With PV Farm Transactive Energy

This article proposes a new mathematical formulation for optimal operation scheduling for a remote photovoltaic (PV) farm and distributed electric vehicle charging stations (D-EVCSs), which are owned by a private entity. The proposed model is formulated to maximize the profit of the D-EVCSs private investor through optimal electric vehicle (EV) charging coordination and pricing mechanism. The proposed pricing mechanism aims to achieve an expected revenue by the private investor, while guaranteeing a low charging price for EVs to ensure the EV owners’ satisfaction. For the EV supply application, D-EVCS integrates a battery storage system and rooftop PV. However, the rooftop PV installation is constrained to the limited footprint of the EVCS. For this reason, the investment in a remote PV farm and its impact on the expected revenue and the EVs charging price is introduced in this article. The power generated by the remote PV farm can be transacted to the D-EVCSs using a power purchase agreement through the utility grid infrastructure. In such a transaction, the electricity service and distribution fees are paid to the utility grid for overseeing the PV farm power transaction. The proposed model also considers the opportunity for D-EVCSs to participate in the provision of operating reserve and demand response ancillary services. Different case studies are evaluated for the purpose of validating the effectiveness of the proposed model.

The Effect of Distribution Costs and Distribution Channels on the Sales of PT. Pasha Jaya Medan

Distribution basically is the activity of delivering products from the hands of producers to the hands of consumers or customers in good condition, on time and in accordance with the wishes of the buyer. The distribution process can be done either directly or through a chain of distributors or intermediaries. In distribution activities, there must be distribution costs and distribution channels. Distribution costs and distribution channels must be managed properly in order to have a positive impact on sales. The purpose of this study was to determine the effect of distribution costs and distribution channels on sales of PT. Pasha Jaya Medan. The population in this study amounted to 9 companies that bought PT. Pasha Jaya Medan. Each of these companies, taken 5 respondents so that the total sample amounted to 45 respondents. Samples were taken using a saturated sampling technique. (significant effect on the sales of PT. Pasha Jaya Medan, Distribution Channel ( no significant effect on the sales of PT. Pasha Jaya Medan, and Distribution Costs and Distribution Fees simultaneously affect the sales of PT. Pasha Jaya Medan.

Solar Power: Stellar Profit or Astronomic Cost? A Case Study of Photovoltaic Installations under Poland’s National Prosumer Policy in 2016–2020

In Poland, the development of photovoltaic (PV) installations is an important element in the development of the Renewable Energy Sources (RES) sector and supports the prosumer power industry. The purpose of the article is to present a case study of the PROSUMENT program. It analyzes the data available to date on the development of the PV market in Poland. Apart from the costs of installing the PV systems, the article analyzes the profitability of investment for different micro-power installation capacities. A calculation for micro-power installations subsidized under the PROSUMENT program for various PV capacities is presented, along with the actual amount of the subsidy. The adopted calculation methodology is a comparative verification analysis of the investment cost estimate for a for the two studied PV facilities, i.e., Micro-power installation 1 and Micro-power installation 2. The building’s annual energy demand was adopted at the same level for both examples, with fixed active energy and distribution fees. The study includes a cost estimate for installing the PV systems and the profitability of the investments for various micro-power installation capacities. The analysis of the subsidy under the PROSUMENT program demonstrated that, in the analyzed period of 2016–2020, the best results were achieved by investments with a capacity of 10 kWp. In terms of the net subsidy value, the best results ranged between 27.20 and 19.10% of the total investment costs. Development of the Polish prosumer power market requires building public awareness of prosumer power production as an opportunity for the growth of the Polish economy.

The past, present and future of the non-traded NAV REIT structure

Purpose Over 15 years ago Goodwin created the first open-ended, non-traded real estate investment trust (REIT) with regular sales and redemptions at net asset value (“NAV REIT”). While NAV REITs are now well established, there is still room for improvement. Design/methodology/approach We traced the evolution of the NAV REIT’s innovative, investor-friendly features – transparent valuation to strike NAV, liquidity via redemption at NAV per share, indefinite life, lower/simpler selling and management fees, share classes with different upfront loads and trailing distribution fees. Findings To improve the liquidity feature of NAV REITs, share classes could be used to lower the drag on performance and match available liquid assets with expected redemption requests. The goal: balance inflows and outflows, optimize portfolio construction, and better safeguard liquidity. Practical implications One need not look far for the dark side of liquidity in open-ended real estate funds. The UK experience with regulated property funds is a painful object lesson. There is a better way: while traditional non-traded REITs were designed and marketed for investment by retail investors, NAV REITs appeal to a diverse range of investors, and share classes could be enhanced to offer both a menu of selling loads and a menu of liquidity and dividend-rate options to produce a smooth curve blending cost and time. Originality/value Innovation in structuring real estate investment vehicles has broadened choices for all and the NAV REIT is flexible, scalable, open-ended and cost-efficient. Fund sponsors, fund managers, financial advisors, investors and even regulators could find food for thought in our analysis.

Attributes and Implications of Mutual Fund Revenue Sharing and “Defensive” 12b-1 Fees

Revenue sharing rewards brokers for high and higher sales and/or asset holdings of fund shares, and further defrays current and higher broker costs of advertising and promotion, ongoing broker servicing of fund investor accounts, and educational support. It results in higher broker sales and increases fund assets under management (higher inflows) and profits; higher broker sales of fund shares increases sales concessions and distribution fees. Higher assets under management in turn increase trade size and broker commissions, trade execution, and profits. Revenue sharing usually brings direct payments from fund adviser “profits,” but may be bundled in fund management fees paid to advisers who write the checks. The use of management fees to pay revenue sharing increases fund fee size and fund outflows. Brokers rebate “fall-out benefits” from “excess” revenue sharing payments directly to fund advisers, which motivates higher revenue sharing payments and higher broker profits. Revenue sharing payments via management fees reduce current fund NAVs and shareholder returns. Most retail investors are unaware of the existence, nature, and costs of revenue sharing payments. Revenue sharing is agency conflicted with shareholder interests and returns. TOPICS:Mutual fund performance, wealth management

Why Does Mutual Fund Advertising Work? Some Complementary Evidence

The basic question that this article addresses is: Why does mutual fund advertising work? The summation of external evidence is compatible with evidence that greater mutual fund advertising attracts investors with below-average financial literacy who find the investment decision process overwhelming:1. Investor levels of financial literacy predict differences in investment behavior.2. Investors with below-average financial literacy are overwhelmed by information overload in the investment process and opt out.3. Investors with below-average financial literacy make non- normative “revealed preference” choices that include passive investment, avoidance of investment complexity, and decisions based on limited experience.4. Investors with below-average financial literacy are attracted to funds (increased flow) that come to their attention through greater fund advertising.5. Investors with below-average financial literacy favor broker-sold funds, which underperform direct-sold funds even on a pre-distribution fee basis.6. Broker-sold funds with larger front-end loads and distribution fees provide agency incentives for brokers to sell higher-cost and lower-performing funds for their own benefit.7. Funds sold through selected superior financial advisors are to be favored over broker-sold funds due to higher standards of legal performance, higher quality and range of services, lower-cost and higher-performing funds, and “fee only” charges.

The Total Expense Ratio: The Reality of Distribution Fees—“Behind the Mutual Fund Curtain”

This study uses the portion of a new Total Expense Ratio construct that discloses the reality of adviser/distributor payments of hidden distribution fees to sales brokers “behind the mutual fund curtain.” Distribution fees consist of dealer (broker) concessions, account servicing (12b-1 fees), types of revenue sharing payments, and soft-dollar trades. Distribution fees are one of four categories in the Total Expense Ratio, the others being (1) management fees, (2) “other” expenses, and (3) transaction costs. Adoption of the complete Total Expense Ratio with normative transparency of disclosure followed by prohibition of 12b-1 fees, revenue sharing payments, and soft-dollar trading requires strong action by fund independent directors, the fund industry, and most importantly, by Congress and the SEC. Only a few fund advisers are likely to join in this effort to change their very profitable status quo. However, as the article maintains, fund shareholders deserve to receive their “fiduciary protections” under the law and the TER may be useful in this regard.

Development of power-based tariff structure for small customers and pathway for this change

This study discusses the development of alternative power-based tariff structures for small customers and presents a pathway for adapting one new structure. Development of new tariff structures is needed when actively responding to the future changes in the operating environment of the electricity distribution. In this study, the studied tariff structures were a power-based tariff structure based on a cost-causation principle and a power-based tariff structure with power and time limits. The customer specific relative and absolute changes in the annual electricity distribution fees were analysed and by emphasising the customer acceptance an acceptable pathway was created.

Analysis of transition steps towards power-based distribution tariff of small customers

This study discusses the development of distribution tariffs of small customers. Future changes in the electricity sector challenge the present distribution tariff structures and instead of a passive approach, the distribution system operators (DSO) have the opportunity to respond to the challenges by applying novel tariff structures. The movement towards power-based distribution tariffs (PBDT) has been seen as a very potential development direction. However, before implementing PBDTs, or any other novel tariff structures, it has to be ensured that the change will not cause unwanted outcomes such as too aggressive an impact on the distribution fees of the customers or on the total revenue of the DSO. The main focus of this study is on the transition viewpoints from present tariffs towards one selected PBDT structure.

The 2017 Power Trading Agent Competition

This is the specification for the Power Trading Agent Competition for 2017 (Power TAC 2017). Power TAC is a competitive simulation that models a “liberalized” retail electrical energy market, where competing business entities or “brokers” offer energy services to customers through tariff contracts, and must then serve those customers by trading in a wholesale market. Brokers are challenged to maximize their profits by buying and selling energy in the wholesale and retail markets, subject to fixed costs and constraints; the winner of an individual “game” is the broker with the highest bank balance at the end of a simulation run. Costs include fees for publication and withdrawal of tariffs, and distribution fees for transporting energy to their contracted customers. Costs are also incurred whenever there is an imbalance between a broker’s total contracted energy supply and demand within a given time slot. The simulation environment models a wholesale market, a regulated distribution utility, and a population of energy customers, situated in a real location on Earth during a specific period for which weather data is available. The wholesale market is a relatively simple call market, similar to many existing wholesale electric power markets, such as Nord Pool in Scandinavia or FERC markets in North America, but unlike the FERC markets we are modeling a single region, and therefore we approximate locational-marginal pricing through a simple manipulation of the wholesale supply curve. Customer models include households, electric vehicles, and a variety of commercial and industrial entities, many of which have production capacity such as solar panels or wind turbines. All have “real-time” metering to support allocation of their hourly supply and demand to their subscribed brokers, and all are approximate utility maximizers with respect to tariff selection, although the factors making up their utility functions may include aversion to change and complexity that can retard uptake of marginally better tariff offers. The distribution utility models the regulated natural monopoly that owns the regional distribution network, and is responsible for maintenance of its infrastructure. Real-time balancing of supply and demand is managed by a market-based mechanism that uses economic incentives to encourage brokers to achieve balance within their portfolios of tariff subscribers and wholesale market positions, in the face of stochastic customer behaviors and weather-dependent renewable energy sources. Changes for 2017 are focused on a more realistic wholesale market, reducing the market power of brokers by making the simulation scenario into a relatively small part of a larger market, and are highlighted by change bars in the margins. See Section 5.3 for details.

The 2018 Power Trading Agent Competition

This is the specification for the Power Trading Agent Competition for 2018 (Power TAC 2018). Power TAC is a competitive simulation that models a liberalized retail electrical energy market, where competing business entities or offer energy services to customers through tariff contracts, and must then serve those customers by trading in a wholesale market. Brokers are challenged to maximize their profits by buying and selling energy in the wholesale and retail markets, subject to fixed costs and constraints; the winner of an individual game is the broker with the highest bank balance at the end of a simulation run. Costs include fees for publication and withdrawal of tariffs, and distribution fees for transporting energy to their contracted customers. Costs are also incurred whenever there is an imbalance between a broker’s total contracted energy supply and demand within a given time slot. The simulation environment models a wholesale market, a regulated distribution utility, and a population of energy customers, situated in a real location on Earth during a specific period for which weather data is available. The wholesale market is a relatively simple call market, similar to many existing wholesale electric power markets, such as Nord Pool in Scandinavia or FERC markets in North America, but unlike the FERC markets we are modeling a single region, and therefore we approximate locational-marginal pricing through a simple manipulation of the wholesale supply curve. Customer models include households, electric vehicles, and a variety of commercial and industrial entities, many of which have production capacity such as solar panels or wind turbines. All have “real-time” metering to support allocation of their hourly supply and demand to their subscribed brokers, and all are approximate utility maximizers with respect to tariff selection, although the factors making up their utility functions may include aversion to change and complexity that can retard uptake of marginally better tariff offers. The distribution utility models the regulated natural monopoly that owns the regional distribution network, and is responsible for maintenance of its infrastructure. Real-time balancing of supply and demand is managed by a market-based mechanism that uses economic incentives to encourage brokers to achieve balance within their portfolios of tariff subscribers and wholesale market positions, in the face of stochastic customer behaviors and weather-dependent renewable energy sources. Changes for 2018 are focused on stability, on simplifying interaction with the balancing market, and on encouraging more vigorous competition, and are highlighted by change bars in the margins. See Sections 3.1.2, 6, and 8.5 for details.

Mutual Funds and the Regulatory Capture of the SEC

Regulatory agencies are created to act in the public interest but often end up acting in the interests of those regulated. This is known as regulatory capture. The mutual fund industry is the custodian of massive levels of wealth of the investing public and is regulated by the Securities Exchange Commission (“the SEC”). Mutual fund assets are currently in the neighborhood of $16 trillion and these assets generate revenues in excess of $100 billion per year for the firms that manage mutual funds. The investment management industry is incentivized to influence the regulators by whatever means available to maximize profits for their owners. This paper documents how the investment management industry has captured the SEC in certain key policy areas. As a result, the industry is able to siphon off billions of dollars per year in excessive and often hidden fees. Absent political considerations and industry interference, an uncaptured Commission focused on the best interested of investors could unilaterally rectify the worst abuses associated with excessive advisory and distribution fees.

SEC publishes guidance on mutual fund distribution and sub-accounting fees

Purpose To explain the guidance published on January 6, 2016 by the SEC’s Division of Investment Management containing its views and recommendations relating to mutual fund distribution and sub-accounting fees. Design/methodology/approach Explains the SEC’s Office of Compliance Inspections and Examinations focus on “distribution in guise” payments, its 2013 “sweep exam,” an enforcement action against a fund’s adviser and affiliated distributor related to payments for distribution-related activities outside of a 12b-1 plan, lists SEC staff recommendations with respect to mutual fund distribution and sub-accounting fees, summarizes the SEC’s guidance on board oversight of sub-accounting fees, provides indicia that a payment may be for distribution-related activities, and points to the need for mutual funds to have policies and procedures designed to prevent violations of Section 12(b) and Rule 12b-1. Findings The guidance is an outgrowth of the staff’s observations from a three-year “distribution in guise” sweep exam of mutual fund complexes, investment advisers, broker-dealers and transfer agents conducted by the SEC’s Office of Compliance Inspections and Examinations and other offices and divisions of the SEC to identify whether firms were using fund assets to directly or indirectly finance any activities primarily intended to result in the sale of fund shares outside of an approved Rule 12b-1 distribution plan. Originality/value Practical guidance from experienced financial services lawyers.

On the Impact of Regulating Commissions: Evidence from the Indian Mutual Funds Market

Commissions-motivated agents have historically helped the development of many markets, but research suggests brokers motivated by commissions sometimes steer consumers towards inappropriate products. This issue is particularly important in household financial markets where consumers may be unable to evaluate products on their own. While reforms attempting to limit commission payments have been undertaken worldwide, little research has evaluated the impact of these reforms. We study a major Indian investor protection reform that attempted to reduce commissions tied to mutual fund sales by banning the distribution fees that mutual funds had previously earmarked for commissions. We analyze the policy impact by comparing funds charging high versus low distribution fees pre-reform and find no evidence that the reform itself reduced fund flows. We argue that the most plausible explanation is that the Indian asset management industry maintained substantial commissions to brokers through other revenue sources apart from the banned distribution fees.

The 2016 Power Trading Agent Competition

This is the specification for the Power Trading Agent Competition for 2016 (Power TAC 2016). Power TAC is a competitive simulation that models a “liberalized” retail electrical energy market, where competing business entities or “brokers” offer energy services to customers through tariff contracts, and must then serve those customers by trading in a wholesale market. Brokers are challenged to maximize their profits by buying and selling energy in the wholesale and retail markets, subject to fixed costs and constraints; the winner of an individual “game” is the broker with the highest bank balance at the end of a simulation run. Costs include fees for publication and withdrawal of tariffs, and distribution fees for transporting energy to their contracted customers. Costs are also incurred whenever there is an imbalance between a broker’s total contracted energy supply and demand within a given time slot.The simulation environment models a wholesale market, a regulated distribution utility, and a population of energy customers, situated in a real location on Earth during a specific period for which weather data is available. The wholesale market is a relatively simple call market, similar to many existing wholesale electric power markets, such as Nord Pool in Scandinavia or FERC markets in North America, but unlike the FERC markets we are modeling a single region, and therefore we approximate locational-marginal pricing through a simple manipulation of the wholesale supply curve. Customer models include households, electric vehicles, and a variety of commercial and industrial entities, many of which have production capacity such as solar panels or wind turbines. All have “real-time” metering to support allocation of their hourly supply and demand to their subscribed brokers, and all are approximate utility maximizers with respect to tariff selection, although the factors making up their utility functions may include aversion to change and complexity that can retard uptake of marginally better tariff offers. The distribution utility models the regulated natural monopoly that owns the regional distribution network, and is responsible for maintenance of its infrastructure. Real-time balancing of supply and demand is managed by a market-based mechanism that uses economic incentives to encourage brokers to achieve balance within their portfolios of tariff subscribers and wholesale market posi- tions, in the face of stochastic customer behaviors and weather-dependent renewable energy sources.Changes for 2016 are focused on a more realistic cost model for brokers, and are highlighted by change bars in the margins. See Section 7 for details.

Board Overlaps in Mutual Fund Families

We examine a unique characteristic of mutual fund governance: a common set of di- rectors serving simultaneously on the boards of multiple funds within a fund family. At rst glance, this governance structure appears to bene t investors because it is associated with higher fund returns and better fund manager quality. However, funds with higher degrees of board overlap also charge higher marketing and distribution fees, which have been criticized as being the least transparent cost component for mutual fund investors. Board overlaps are also associated with detrimental unobserved actions by fund managers: window dressing and strategic performance transfer between funds occur more often in mutual fund families with greater degrees of director overlap. We conclude that director oversight of multiple funds is a mixed blessing.

Do Market Dominant Fund Distributors Provide Better Performing Funds To Investors?

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.