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Legal constraints, transaction costs and the evaluation of mutual funds

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  • Miguel Martinez Sedano

Abstract

The paper considers the legal restrictions on investment and the transaction costs related to optimal turnover that affect mutual funds. A method is developed for mutual fund performance evaluation when both these factors are included in the reference portfolios, and it is applied to a sample of available Spanish mutual funds. The poor performance results reflected in previous studies are not significantly modified. However, when net returns on the reference portfolios are used in the evaluation the performance is clearly improved.

Suggested Citation

  • Miguel Martinez Sedano, 2003. "Legal constraints, transaction costs and the evaluation of mutual funds," The European Journal of Finance, Taylor & Francis Journals, vol. 9(3), pages 199-218.
    • Handle: RePEc:taf:eurjfi:v:9:y:2003:i:3:p:199-218
    DOI: 10.1080/13518470010011260
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