Multiple-share classes and mutual fund composition
DOI:
https://doi.org/10.61190/fsr.v13i1.4781Keywords:
Loads, Composition, Mutual funds, Multiple-share classesAbstract
This article investigates the effect of multiple-share classes on mutual fund composition. Using 10 annual samples of data, we find that before the mass adoption of multiple-share classes, load funds held less cash relative to no-load funds. However, after most load funds had adopted multiple-share classes, we find no difference in cash held between load and no-load funds. These results suggest that the rise of multiple-share-class funds has reduced the compositional advantages of load funds, and hence makes the case for investors to hold single-class, no-load funds.
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