Total Expense Ratio Research Articles

The Components of Mutual Fund Fees

Several research studies have found that mutual fund expense ratios decline as funds get larger. This paper decomposes the annual expense ratios of actively managed domestic equity funds into their component fees. Most of the observed decline in total expense ratios comes from the small fees paid to outside service providers and the large majority of this decline occurs for the smallest one third of funds. The largest component of the expense ratio, advisory fees, is essentially constant for larger funds. The second largest component, marketing fees, increases as fund assets grow.

Mutual Fund Fees Around the World

Using a new database, we study fees charged by 46,580 mutual fund classes offered for sale in 18 countries, which account for about 86 of the world fund industry in 2002. We examine management fees, total expense ratios, and total shareholder costs (including load charges). Fees vary substantially across funds and from country to country. To explain these differences, we consider fund, sponsor, and national characteristics. Fees differ by investment objectives: larger funds and fund complexes charge lower fees; fees are higher for funds distributed in more countries and funds domiciled in certain offshore locations (especially when selling into countries levying higher taxes). Substantial cross-country differences persist even after controlling for these variables. These remaining differences can be explained by a variety of factors, the most robust of which is that fund fees are lower in countries with stronger investor protection.

Assessing Mutual Fund Expenses and Transaction Costs

Mutual fund expenses are much too high, which reflects the lack of pricing competition. It can be concluded from this that fund independent directors are not performing their fiduciary responsibility as defined under The Investment Act of 1940. This article provides an analysis for assessing the reasonableness of a mutual fund9s total expense ratio. It concludes that disclosure of brokerage commissions and implicit trading costs remains effectively hidden and completely hidden, respectively, from fund shareholders. This must change and this study provides an approach for doing so. <b>TOPICS:</b>Mutual funds/passive investing/indexing, manager selection

Mutual Funds Fees Around the World

Using a new database, we study fees charged by 46,580 mutual fund classes offered for sale in 18 countries, which account for about 86% of the world fund industry in 2002. We examine management fees, total expense ratios, and total shareholder costs (which include load charges). Fees vary substantially across funds and from country to country. To explain these differences, we consider fund, sponsor, and national characteristics. Fees differ by investment objectives; larger funds and fund complexes charge lower fees; fees are higher for funds distributed in more countries and funds domiciled in certain offshore locations (especially when selling into countries levying higher taxes). Substantial cross-country differences persist even after controlling for these variables. These remaining differences can be explained by a variety of factors, the most robust of which is that fund fees are lower in countries with stronger investor protection.

Assessing Mutual Fund Expenses and Transaction Costs

This is a first-step mutual funds study that provides analysis and disclosure of the elements of a newly defined total expense ratio, which includes the regulatory expense ratio, brokerage commissions, and implicit trading costs. Three structures are provided that identify whether a particular fund’s total expense ratio is relatively reasonable or excessive relative to each of two benchmark funds. The concepts of expense effectiveness and breakeven rate of return are employed in this process. Mutual fund brokerage commissions and implicit trading costs vary significantly among various types and styles of domestic equity funds, and when summed they are not infrequently larger than a fund’s regulatory expense ratio. This is true in the current study for Vanguard 500 Index Fund. The continuing bad news is that disclosure of brokerage commissions and implicit trading costs remains effectively hidden and completely hidden, respectively, from fund shareholders. This must change and this study provides an approach for doing so.

Can mutual funds characteristics explain fees?

This paper studies the determinants of mutual fund fees in the Italian funds industry. After a brief description of the Italian market, we introduce a model to describe how the total expense ratio can be explained by fund characteristics. A dataset including 1958 funds sold to Italian investors in the period 1999–2002 is used for the empirical analysis. Our results partially confirm the evidence found by previous studies. Larger funds, bigger asset management companies and funds domiciled abroad charge lower costs. Funds sold to institutional investors and/or by financial advisors are cheaper. Total expense ratio is lower for load funds.

Active international mutual fund management; can managers neat the index?

We examine the benefits of active international mutual fund management. Is there an advantage to active fund management over investing in index funds? Previous research has found that for domestic funds, active fund management can not outperform index funds. But there has been no clear conclusion as to active international mutual fund management. We utilize Morningstar Mutual Fund data to analyze five international mutual fund categories, and overall, for a sample of 831 funds with 4,835 annual return data points. We find the difference in mean return (index minus fund return) is negative for all fund categories, except for Europe funds. The difference is significant overall and for four of the five fund categories. The results from the multivariate regression show no relationship between total return and expense ratio, but there is a significant positive relationship between total return and turnover, and a significant positive relationship between total return and fund size (LN net assets). As opposed to domestic mutual funds, it appears to be beneficial to select actively managed international mutual funds over index funds.

Board Composition, Committees, and Organizational Efficiency: The Case of Nonprofits

This article investigates the relationship between nonprofit board composition and organizational efficiency. Overall,we find a significant statistical association between the presence of major donors on the board and indicators of organizational efficiency. Although causality cannot be demonstrated,our findings are consistent with the Fama and Jensen (1983) conjecture that major donors monitor nonprofit organizations at least in part through their board membership. The multivariate analysis shows that the ratio of total expenses to program expenses is significantly and negatively associated with higher donor representation. Decomposing the total expense ratio into its two components,we find that different factors affect the administrative and fundraising expense ratios. The percentage of major donors on the finance committee,a key committee overseeing budgets and administrative expenses,is negatively related to the organization’s administrative expenses ratio. The presence of major donors on other board committees is not significantly statistically associated with nonprofit efficiency.

Strategic Positioning and the Financing of Nonprofit Organizations: Is Efficiency Rewarded in the Contributions Marketplace?

This article addresses the question of whether operational efficiency is recognized and rewarded by the private funders that support nonprofit organizations in fields ranging from education to social service to arts and beyond. Looking at the administrative efficiency and fundraising results of a large sample of nonprofit organizations over an 11‐year period, we find that nonprofits that position themselves as cost efficient—reporting low administrative to total expense ratios—fared no better over time than less efficient appearing organizations in the market for individual, foundation, and corporate contributions. From this analysis, we suggest that economizing may not always be the best strategy in the nonprofit sector.

Strategic Positioning and the Financing of Nonprofit Organizations: Is Efficiency Rewarded in the Contributions Marketplace?

This article addresses the question of whether operational efficiency is recognized and rewarded by the private funders that support nonprofit organizations in fields ranging from education to social service to arts and beyond. Looking at the administrative efficiency and fundraising results of a large sample of nonprofit organizations over an 11 year period, we find that nonprofits that position themselves as cost efficient - reporting low administrative to total expense ratios - fared no better over time than less efficient appearing organizations in the market for individuals, foundations, and corporate contributions. From this analysis, we suggest that economizing may not always be the best strategy in the nonprofit sector.

The Optimal Choice of Index-Linked GICs: Some Canadian Evidence

&#x0D; &#x0D; &#x0D; Indexed Linked Guaranteed Investment Certificates (ILGICs), also known as equity linked term deposits, have become quite popular over the last few years. From the consumer’s point of view, there are two basic categories of Indexed Linked GIG, the Capped ILGIC and the Participating ILGIC. This paper compares the relative value and appeal of the two ILGIC products from the perspective of the individual investor, using valuation techniques from option pricing theory. We compute the Value per Pre- mium Dollar invested in an ILGIC. Our main conclusions are that ILGICs become less attractive the longer the time horizon of the investor. In addition, participating ILGlCs are preferable to capped ILGICs for short-term maturities and vice versa for longer maturities. A detailed analysis of two particular Canadian products is provided as an application of the basic concepts. We conclude by demonstrating that Values per Pre- mium Dollar range from 94% - 98%. corresponding to a 2%~6% total expense ratio on Index Linked GICs.&#x0D; &#x0D; &#x0D;

前瞻性付費制度(Prospective Payment System)之醫療管理模式研究

From the late 60's, there has been a huge increase in medical expenses in the US. The ratio of total medical expenses to GNP was nearly 14% in 1992. As a result, heavy burden was put on the country's economy. Similar financial impact can be felt by any country implementing health insurance. Hence, a lot of research was carried out, aiming to lessen such financial crises. When the Prospective Payment/Pricing System (PPS) based on DRGs bill was passed in the US in 1983, the method of payment changed from fee for service to PPS, and was then adopted by many other countries. This new payment method has encouraged the cooperative concept among hospitals, doctors and nurses. It is now evident that medical costs in Taiwan continue to rise sharply. According to the national health insurance scheme, DRGs will be used as the basis for in-patients payments. However, as we are lacking a satisfactory cost accounting system and the management of medical record classification is still not flawless, it is now planned that the method of Case Payment will be used when the system starts. To face the new payment system, medical specialists and hospital management personnel must cooperate closely to control medical cost, and at the same time maintain high quality of health care services. Policies and models proposed to achieve these objectives include standardization of concurrent and retrospective review. Important cores are the estalishment of profiles of medical doctors, the management of medical resources and structural reorganization. Research have shown that such policies are effective. Nevertheless, no one to date has combined all of these to formulate a single comprehensive model. This model includes the procedures involved in defining practice parameters and standards. It also examines the continue improvement in cost and quality control by concurrent and retrospective review. In addition, utilization review, application of doctors profile and continued education for medical practitioners are all parts of the model. With careful editing and compilation, this model is designed to be applicable and effective. Special attention is paid to ensure that the medical professionals are fully respected. The role of the management is to provide administrative support but not to interfere with any practices. Operational procedures for abnormal management, the purpose of which is for revision and discussion but not punishment, must be simple. Medical data analysis is an importnat domain in our model formulation. Information and system analysis experts are consulted to consider how to accomplish all the predetermined goals without increasing computer CPU workload substantially. As the model combines of all effective cost and quality control methods, we anticipate that the use of this simple effective managerial model will increase efficiency and productivity of a hospital.