A Study On The Relationship Between Managerial Quality And Management Expenses In The Mutual Fund

As an instrument of congregate investment and specialized financing, mutual fund actually represents the relationship of principal-agent. The principal (the investor) and the attorney (the fund manager) have different objectives when they cooperated. They share asymmetric of which the principal takes a disadvantage. To the aim of protect effectively the investor's interest, discussing the relationship between the fund expenses and fund managerial quality, demonstrating the rationality of the fund expenses setting will become a effective means. Firstly, this paper analysed the study presupposition of the fund expense and the managerial quality, made a contrastive analyse to the expenses structure and expenses setting in Sino-U.S.A, discussed the influence of the managerial quality to the fund expense, demonstrated the relationship between the fund expenses and the evaluation index of managerial quality. And then, this paper differentiated the fund of the better-worse performance, proposed relative hypothesis: for the fund of the better performance, there is a positive or negative correlation between the expense ratio and the fund performance. For the fund of the worse performance, the expense ratio and the fund performance have a positive or negative correlation. For the fund of the better performance, there is a positive or negative correlation between the expense ratio and the portfolio risk .For the fund of the worse performance,the expense ratio and the portfolio risk have a positive or negative correlation. The paper propose a hypothesis of the expense ratio and the fund size: there is a positive or negative correlation between the fund expense ratio and size which tried to demonstrate the size effect. The results of empirical study suggest that for the fund of better performance, there is a negative correlation between the fund expense rate and the James index Jp; but there is a positive correlation between the fund expense rate and the James index Jp for the fund of worse performance.At large scale, the fund expense rate and the fund performance have a negative correlation, this accord with the benefits of investors. For the fund of better performance and the fund of worse performance, its fund expense rate and its risk of the portfolio have a positive correlation; For the fund of worse performance, its fund expense rate and its risk of the portfolio have a negative correlation; Totally, the fund expense rate and the risk have a distinctly positive correlation, this show the weak supervision system and the underdevelopment of the fund managers market. In any case, the fund expense rate and the fund scope have always a weakly negative correlation, which demonstrate the size economy exists for the fund expense. Finally, the paper proposes relative countermeasure and suggest by the result of empirical study.