Performance and Persistence in Money Market Fund Returns

Authors

  • Dale L. Domian Memorial University of Newfoundland, Faculty of Business Administration, St. John’s, Newfoundland, AlB 3X5 Canada
  • William Reichenstein Baylor University, Department of Finance, Insurance, and Real Estate, P.O. Box 98004, Waco, TX 76798-8004

DOI:

https://doi.org/10.1016/S1057-0810(97)90011-1

Abstract

We study the factors affecting the cross section of net returns of money market mutual finds from 1990 through 1994, and the persistence of relative returns across years. We find that the expense ratio is the most important factor in explaining differences in net returns. Government-only funds produce slightly lower returns than other-taxable funds, and economies of scale are evident only for the smaller funds. Money funds’ rel- ative returns show strong persistence. Most funds maintain stable expense ratios, so low-cost funds produce consistently high relative returns.

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Published

1997-09-30

How to Cite

Domian , D. L., & Reichenstein , W. (1997). Performance and Persistence in Money Market Fund Returns. Financial Services Review, 6(3), 169–183. https://doi.org/10.1016/S1057-0810(97)90011-1

Issue

Vol. 6 No. 3 (1997): Financial Services Review

Section

New Original Submission

License

Copyright (c) 1997 JAI Press Inc.

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