Determinants of Management Expense Ratio for Canadian Mutual Funds
Using a sample of 6,739 Canadian mutual funds, we study the determinants of the Management Expense Ratio (MER). Our main finding is that banks offer mutual funds at a MER 0.4 percentage point cheaper than those offered by non-bank financial institutions. This result could be explained by the presence of economies of scope which reduce the operating cost of banks and thus the cost of investing for their clients.
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