MARC Record from Library of Congress

LEADER: 03102cam a22002897a 4500
001 2007611797
003 DLC
005 20150917074829.0
007 cr |||||||||||
008 070919s2007 mau sb 000 0 eng
010 $a 2007611797
040 $aDLC$cDLC$dDLC
050 00 $aK487.E3
100 1 $aCoates, John C.,$d1964-
245 10 $aCompetition in the mutual fund industry$h[electronic resource] :$bevidence and implications for policy /$cJohn C. Coates IV & R. Glenn Hubbard.
260 $aCambridge, MA :$bHarvard Law School,$c[2007]
490 1 $aDiscussion paper,$x1045-6333;$vno. 592
538 $aSystem requirements: Adobe Acrobat Reader.
538 $aMode of access: World Wide Web.
500 $aTitle from PDF file as viewed on 9/19/2007.
530 $aAlso available in print.
504 $aIncludes bibliographical references.
520 3 $a"Since 1960 the mutual fund industry has grown from 160 funds and $18 billion in assets under management to over 8,000 funds with $10.4 trillion in assets. Yet critics, including Yale Chief Investment Officer David Swensen, Vanguard founder Jack Bogle, and New York Governor Eliot Spitzer, call for more fund regulation, claiming that competition has not protected investors from excessive fees. Starting in 2003, the number of class action suits against fund advisors increased sharply, and, consistent with critics' views, some courts have excluded or treated skeptically evidence of competition and comparable fees of other funds. Skepticism about fund competition dates to the 1960s, when the SEC accepted the view that market forces fail to constrain advisory fees, in part because fund boards rarely fire advisors. In this article, we show that economic theory, empirical evidence, and careful analysis of the laws and institutions that shape mutual funds refute this view. Fund critics overlook the most salient characteristic of a mutual fund, redeemable shares. While boards rarely fire advisors, fund investors may fire advisors at any time by redeeming shares and switching into other investments. Industry concentration is low, new entry is common, barriers to entry are low, and empirical studies -- including new evidence presented in this article -- show higher advisory fees significantly reduce fund market shares, and so constrain fees. Fund performance is consistent with competition exerting a strong disciplinary force on funds and fees. Our findings lead us to reject the critics' views in favor of the legal framework established by ʹ36(b) of the Investment Company Act and the lead case interpreting that law (the Gartenberg decision), while suggesting Gartenberg is best interpreted to allow the introduction of evidence regarding competition between funds"--John M. Olin Center for Law, Economics, and Business web site.
700 1 $aHubbard, R. Glenn.
710 2 $aJohn M. Olin Center for Law, Economics, and Business.
830 0 $aDiscussion paper (John M. Olin Center for Law, Economics, and Business : Online) ;$vno. 592.
856 40 $uhttp://www.law.harvard.edu/programs/olin_center/papers/592.php