Tacit 'Price Fixing' Of CEF Expense Ratios?

08.02.2012 14:16, SeekingAlpha.com: Home Page

By Joe Eqcome:

Surprisingly, and somewhat counter-intuitively, there appears to be a no "economies of scale" between the level of CEFs' expense ratios and their relative size on a number of metrics. Additionally, CEFs' expense ratios appear to have little relationship to their average 3-year annual risk-adjusted total-return performance.

Therefore, the only thing that a CEF's expense ratio predicts is how much the investment manager is being paid.

Lip Service: Despite "lip service" to the contrary, it appears that CEFs' expense ratios are determined less by economic or investment factors than by the custom of comparing expense ratios of comparable CEFs. This may represent an inadvertent form of price fixing.

Give Me Your Watch and I'll Tell You the Time: Remember the largest portion of the expense ratio is the investment management's advisory fees. The trustees sign-off on the advisory fee by hiring and paying for a third-party consultant to do a study

Wertpapiere:

•   Xing (Isin: DE000XNG8888)