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Risk-Adjusted Impact of Administrative Costs on the Distribution of Terminal Wealth for Long-Term Investment
Guillén, Montserrat; Jarner, Søren Fiig; Perch Nielsen, Jens; Pérez Marín, Ana María
Universitat de Barcelona
The impact of administrative costs on the distribution of terminal wealth is approximated using a simple formula applicable to many investment situations. We show that the reduction in median returns attributable to administrative fees is usually at least twice the amount of the administrative costs charged for most investment funds, when considering a risk-adjustment correction over a reasonably long-term time horizon. The example we present covers a number of standard cases and can be applied to passive investments, mutual funds, and hedge funds. Our results show investors the potential losses they face in performance due to administrative costs.
Riquesa
Distribució (Teoria econòmica)
Societats d'inversió
Control de costos
Wealth
Distribution (Economic theory)
Mutual funds
Cost control
cc-by (c) Guillén, Montserrat et al., 2014
http://creativecommons.org/licenses/by/3.0/es
Article
info:eu-repo/semantics/publishedVersion
Hindawi Publishing Corporation
         

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