Title: Fee Structure, Return Chasing and Mutual Fund Choice: An Experiment

Speaker：Te Bao

Institution: Assistant Professor of Economics, Nanyang Technological University

Time: 15:00-16:30, Dec 28^th

Location: Room 514, SOE

Abstract: We present a laboratory experiment to investigate the effect of the fee structure and past returns on mutual fund choice. We find that the inclusion of a (periodic and small) operation expenses fee does not distort investment choices. However, a fee in the form of a, much larger, front-end load is used by subjects as a commitment device and leads to lock-in into one of the funds. In addition we find that, even when subjects know that future returns are independent of past returns, these past returns are an important determinant of subjects’ investment choices.