Another Puzzle: The Growth in Actively Managed Mutual Funds

  title={Another Puzzle: The Growth in Actively Managed Mutual Funds},
  author={Martin J. Gruber},
  journal={Journal of Finance},
  • M. Gruber
  • Published 1996
  • Economics
  • Journal of Finance
Mutual funds represent one of the fastest growing type of financial intermediary in the American economy. The question remains as to why mutual funds and in particular actively managed mutual funds have grown so fast, when their performance on average has been inferior to that of index funds. One possible explanation of why investors buy actively managed open end funds lies in the fact that they are bought and sold at net asset value, and thus management ability may not be priced. If management… Expand
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