Do Mutual Fund Performance and Expense Structure Influence Minimum Investment Amounts?

There is evidence to support the claim that minimum initial purchases in mutual funds are indirectly proportional to expense ratios. Funds with large minimum initial purchase levels have smaller expense ratios. As expense ratios fall, net returns to investors are increased as cost savings are passed on to their returns. This research will examine whether mutual funds with large minimum investments deliver superior performance, above that saved in lower expense fees. As prior research has shown, there is no evidence to prove that institutional funds with large minimum investments deliver much better net returns than retail funds with very small minimum investments. This paper essentially finds the same conclusion; however there are small improvements in net returns for institutional funds. The research attempts to find relationships between minimum initial purchase, returns, portfolio turnover, manager tenure, expense ratios, front-end loads and deferred loads for institutional and retail mutual funds