We study a natural experiment in the Indian mutual funds sector that created a 22 month period in which closed-end funds were allowed to charge an arguably shrouded amortized fee whereas open-end funds were forced to charge standard entry loads. We find that allowing closed-end funds to charge...

Active fee is the ratio between the excess cost of active management over the index alternative and the fund's activity level. We suggest a simple model that explains active capital allocations in the presence of time-varying active fee. We show that investors respond in accordance with the...

The active mutual fund equilibrium model developed by Berk and Green (2004) predicts that fees should not matter for investors’ mutual fund choices. We examine how fees influence demand for active mutual funds by analyzing time variation in funds’ fees. Since investors should not pay "alpha...