IQ and Mutual Fund Choice

Using a comprehensive dataset of Finnish males, we study IQ's influence on mutual fund choice. High-IQ investors are less likely to own categories of funds that tend to charge higher fees — including balanced funds, actively managed funds, and funds marketed through a retail network. Moreover, within categories of funds stratified by asset class, investment philosophy, and distribution method, high-IQ investors prefer the lowest-fee funds, further reducing the fees incurred. IQ's effect on fee sensitivity controls for other investor attributes, including education and profession, and is robust to the addition of fund family dummies, alternative specifications, and analyses restricted to interesting subsamples