Size doesn't matter: diseconomies of scale in the mutual fund industry revisited
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Peer-reviewed
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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.
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Keywords
Mutual fund performance, Size-performance relation, Instrumental variables, Diseconomies of scale
Journal Title
Journal of Banking and Finance
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Journal ISSN
0378-4266
1872-6372
1872-6372
Volume Title
88
Publisher
Elsevier