The performance of corporate bond mutual funds tends to be estimated using models with limited empirical validation. We survey the literature to determine the models in use and develop a representative set of models. Testing that set of models, we find considerable variation in quality, with the most effective models sharing common traits. We recommend, among the tested models, the four-factor model proposed by Jones and Mo (2021). Regarding the stylized facts of corporate bond fund performance, our recommended model produces notable deviations from the prior literature and other models, including less evidence of positive alphas not attributable to luck.

We provide a new theory of exchange access fees that explains why fees relatively reduce the probability of execution and increase the limit order queue length on “maker-taker” platforms. Nonetheless, the limit order subsidy greatly improves market depth, together with market efficiency and trading volume. Moreover, fee structures never “wash out” regardless of the minimum tick. The regulatory requirement that trading and order flow depend only on raw (nominal) spreads and prices underpins the multi-billion-dollar subsidy to limit orders. So long as a platform remains competitive, elimination of the fee structure does not alter the raw spread, but it does lower the cum fee spread. We test these implications with a unilateral maker-taker fee/rebate reduction using NASDAQ's “quasi-natural” $1.9 trillion experiment to find support for our theory.