Management fees and total expenses of mutual funds in Thailand

To encourage disciplined saving and stimulate growth in capital markets, the Thai government recently introduced two new classes of mutual funds, which provide unique income tax benefits. Using panel data constructed from annual reports, this article offers a general overview of these new funds in terms of size, family affiliation and performance. Special emphasis is placed on fees and total expense ratios, because such features of asset management industries in developing countries such as Thailand have been understudied. Consistent with findings for other countries, Thai funds investing in high-risk, equity securities charge consistently higher fees and expenses than those that focus on fixed income securities. Investors of large funds pay higher management fees, while funds belonging to big families appear to charge lower management fees and total expenses. Finally, there is some suggestive evidence of a negative association between fees charged and investment returns, although simultaneity renders any causal implications inappropriate.