Faculty Publications


Advice on Mutual Fund Selection

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Many empirical studies on mutual fund performance have led investors to believe that a negative relationship exists between expenses and performance. This article shows how there are econometric problems with the regressions that are commonly employed in these studies. These problems have negatively biased investors' perceptions of actively managed funds, which motivates the need to consider factors other than expenses or adherence to a passive management strategy in one's mutual fund selection framework. The literature on such factors that predict fund performance is also reviewed.