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Journal of Banking & Finance Vol. 88 2018

Size does not matter: Diseconomies of scale in the mutual fund industry revisited

Blake Phillips1; Kuntara Pukthuanthong2,3; P. Raghavendra Rau4

1 University of Waterloo · 2 University of Missouri · 3 Cornell University · 4 University of Cambridge

Abstract

The academic literature has found mixed evidence that fund size is negatively related to performance. One reason for the lack of consensus may be that the fund size and performance relation is endogenous. In this paper, we identify a set of instrumental variables that influence fund size but are unrelated to expected fund performance. Using this specification, we show that fund size does not appear to affect fund performance.

DOI
10.1016/j.jbankfin.2017.12.005
Volume
88
Pages
357-365
Language
en
Sources
openalex crossref bibtex:phds-export.bib

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