Are mutual fund investors in jail?

Carlos Alves, Victor Mendes
2007 Applied Financial Economics  
The absence of investor reaction to the poor performance of mutual funds is a widely reported phenomenon. This paper investigates the role of load costs as an explanation for the phenomenon and concludes that back-end load fees are an obstacle to reaction. We find that investors with a high likelihood of undergoing a liquidity crisis, preferring liquidity in decision making, act contrary to the reaction hypothesis, and investors with broader investment horizons do not react to poor performances
more » ... o poor performances due to the fact that they are "imprisoned" by back-end load fees. • CEMPRE is supported by CFT through POCTI of the QCAIII, which is financed by FEDER and Portuguese funds.
doi:10.1080/09603100600970073 fatcat:elvg7hkrlfawpfw3ikmp57yhs4