Distribution fees and mutual fund flows: Evidence from a natural experiment in the Indian mutual funds market

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dc.contributor.author Anagol, Santosh
dc.contributor.author Marisetty, Vijaya
dc.contributor.author Sane, Renuka
dc.contributor.author Venugopal, Buvaneshwaran
dc.date.accessioned 2015-08-05T07:45:53Z
dc.date.available 2015-08-05T07:45:53Z
dc.date.issued 2013-02
dc.identifier.uri http://hdl.handle.net/2275/278
dc.description.abstract Mutual fund companies typically charge investors distribution fees, such as 12b-1 fees in the United States, which they then use to pay commissions to brokers. We evaluate a major Indian investor protection reform that limited the ability of mutual funds to charge distribution fees to pay broker commissions. We identify the impact of this policy change by comparing funds charging high distribution fees prior to the reform to those charging low distribution fees; we show that trends in asset growth across these groups prior to the reform were similar, and argue that a comparison of their asset growth after the reform is indicative of the policy impact. Contrary to industry claims that banning distribution fees would dramatically reduce investment in mutual funds, we find no evidence that the post-reform asset growth was lower for funds charging higher distribution fees prior to the reform. We primarily find that asset growth in funds with previously high distribution fees was higher after the policy change. At the aggregate level, our results suggest that Indian mutual fund growth in the post-policy period was lower for reasons independent of this policy change, such as a general move away from mutual funds towards real assets such as gold and real estate following the 2008 financial crisis. en_US
dc.language.iso en en_US
dc.relation.ispartofseries WP;WP-2013-004
dc.subject regulation en_US
dc.subject commission ban en_US
dc.title Distribution fees and mutual fund flows: Evidence from a natural experiment in the Indian mutual funds market en_US
dc.type Working Paper en_US

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