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| Author: | Latzko, D. A. |
| Title: | Economies of scale in mutual fund administration |
| Journal: | Journal of Financial Research
1999 : FALL, VOL. 22:3, p. 331-339 |
| Index terms: | Stock markets Administration Funds |
| Language: | eng |
| Abstract: | Since many mutual fund expenses are fixed costs, asset growth should reduce the ratio of fund expenses to average net assets. A translog cost function is estimated for a sample of 2,610 funds to evaluate the existence and extent of scale economies in mutual fund administration. The elasticity of fund expenses with respect to fund assets is significantly less than one, indicating there are scale economies in mutual fund administration. Average costs diminish over the full range of fund assets. However, the really rapid decrease in average costs is exhausted by about USD 3.5 billion in fund assets. |
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