Can Mutual Funds Characteristics explain fees and returns?

This paper studies the determinants of mutualfundfees in the Italian funds industry. After a brief description of the Italian market, we introduce a model to describe how the total expense ratio can be explained by fundcharacteristics. A dataset including 1958 funds sold to Italian investors in the period 1999–2002 is used for the empirical analysis. Our results partially confirm the evidence found by previous studies. Larger funds, bigger asset management companies and funds domiciled abroad charge lower costs. Funds sold to institutional investors and/or by financial advisors are cheaper. Total expense ratio is lower for load funds