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Economic Commentary

Mutual Funds, Fee Transparency, and Competition

Mutual funds enable small, less experienced investors to hold diversified portfolios of stocks and bonds at relatively low costs. Though the mutual fund market is competitive in many ways, fees can vary substantially for what are essentially identical products. This may be due to bundling of services, but it may also reflect some confusion on the part of less experienced investors, which inhibits comparative shopping among funds. Suggested reforms for improved fee disclosure seek to make fees more transparent for less informed investors and should improve competitive discipline among funds.

The views authors express in Economic Commentary are theirs and not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System. The series editor is Tasia Hane. This paper and its data are subject to revision; please visit for updates.

Suggested Citation

Carlson, John B., Eduard Pelz, and Erkin Sahinoz. 2004. “Mutual Funds, Fee Transparency, and Competition.” Federal Reserve Bank of Cleveland, Economic Commentary 3/1/2004.

This work by Federal Reserve Bank of Cleveland is licensed under Creative Commons Attribution-NonCommercial 4.0 International