High-Turnover vs. Low-Turnover Mutual Funds: A Comparative Analysis of Value Addition Over Different Horizons
DOI:
https://doi.org/10.70142/studiaekonomika.v22i2.231Keywords:
Mutual funds, high-turnover, low-turnover, performance analysis, market efficiencyAbstract
This qualitative literature review examines the comparative analysis of value addition between high-turnover and low-turnover mutual funds across different investment horizons. Through an extensive review of recent studies, the review identifies key performance metrics, market dynamics, and investor preferences associated with each strategy. High-turnover funds demonstrate superior short-term performance metrics, driven by active management strategies aimed at capitalizing on market inefficiencies and rapid information incorporation. In contrast, low-turnover funds offer stable long-term returns with lower transaction costs and reduced volatility over extended horizons. The review also explores the implications of turnover rates on market efficiency, investor welfare, and regulatory considerations. Limitations include variations in data availability, methodological approaches, and the dynamic nature of financial markets. Future research directions emphasize standardized methodologies, global market analysis, and the long-term impact of regulatory reforms on fund management practices and investor outcomes.
Downloads
References
Alexander, G. J., Cici, G., & Gibson, S. (2007). Does motivation matter when assessing trade performance? An analysis of mutual funds. Review of Financial Studies, 20, 125–150. https://doi.org/10.1093/rfs/hhl039
American Psychological Association. (2020). Publication manual of the American Psychological Association (7th ed.). https://doi.org/10.1037/0000165-000
Back, K., & Baruch, S. (2004). Information in securities markets: Kyle meets Glosten and Milgrom. Econometrica, 72(2), 433–465. https://doi.org/10.1111/j.1468-0262.2004.00494.x
Barras, L., Gagliardini, P., & Scaillet, O. (2022). Skill, scale, and value creation in the mutual fund industry. Journal of Finance, 77(2), 601–638. https://doi.org/10.1111/jofi.13331
Berk, J. B., & van Binsbergen, J. H. (2015). Measuring skill in the mutual fund industry. Journal of Financial Economics, 118(1), 1–20.
https://doi.org/10.1016/j.jfineco.2015.04.002
Busse, J. A., Tong, L., Tong, Q., & Zhang, Z. (2021). Trading regularity and fund performance. Review of Financial Studies, 32(2), 374–422. https://doi.org/10.1093/rfs/hhz019
Cremers, K. J. M., & Pareek, A. (2016). Patient capital outperformance: The investment skill of high active share managers who trade infrequently. Journal of Financial Economics, 122(2), 288–306. https://doi.org/10.1016/j.jfineco.2016.06.008
Van Binsbergen, J., Han, J., Ruan, H., & Xing, R. (2024). A Horizon-Based Decomposition of Mutual Fund Value Added Using Transactions. Journal of Finance. Retrieved from https://doi.org/10.1111/jofi.13331
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2024 Studia Ekonomika
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
KABA Journal of Management and Entrepreneurship (KBJME) is licensed under the International Creative Commons Attribution-NonCommercial-ShareAlike 4.0
Articles in KABA Journal of Management & Entrepreneurship (KBJME) are Open Access articles published under the Creative Commons CC BY-NC-SA License. This licence permits the use, distribution, and reproduction in any medium for non commercial purposes only, provided the work and orginal source are properly cited.
Any derivatives of the original must be distributed under the same license as the original.
