{"title":"Nexus between AMCs and distributors and its impact on investor wealth","authors":"Harsimran Sandhu , Soumya Guha Deb","doi":"10.1016/j.econlet.2024.112028","DOIUrl":null,"url":null,"abstract":"<div><div>This study explores the relationship between AMCs and distributors in India, analyzing the effects of distributor commissions on mutual fund performance and AUM growth of equity funds. While commissions may temporarily boost AUM growth, they often lead to high-expense, underperforming funds, ultimately harming investors. Fund ratings, driven by performance, significantly influence AUM growth, but the negative impact of commissions on ratings can trigger a vicious cycle, hindering long-term growth.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"244 ","pages":"Article 112028"},"PeriodicalIF":2.1000,"publicationDate":"2024-10-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Economics Letters","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0165176524005123","RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"ECONOMICS","Score":null,"Total":0}
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Abstract
This study explores the relationship between AMCs and distributors in India, analyzing the effects of distributor commissions on mutual fund performance and AUM growth of equity funds. While commissions may temporarily boost AUM growth, they often lead to high-expense, underperforming funds, ultimately harming investors. Fund ratings, driven by performance, significantly influence AUM growth, but the negative impact of commissions on ratings can trigger a vicious cycle, hindering long-term growth.
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Many economists today are concerned by the proliferation of journals and the concomitant labyrinth of research to be conquered in order to reach the specific information they require. To combat this tendency, Economics Letters has been conceived and designed outside the realm of the traditional economics journal. As a Letters Journal, it consists of concise communications (letters) that provide a means of rapid and efficient dissemination of new results, models and methods in all fields of economic research.
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