Date of Award

Spring 1999

Document Type

Legacy Thesis

Degree Name

Bachelor of Science (BS)


Finance and Economics


College of Business

First Advisor

Gerald Boyles


Perhaps the most popular investment alternative during the past decade has been mutual funds. This paper examines the mutual fund industry. Stock mutual funds have enjoyed a period of rapid growth during the 1990's. As a result of this large inflow of money into stock mutual funds, some economies of scale should have developed. More assets under management should provide larger revenues (i.e., management fees), while certain costs of managing and operating a mutual fund should not increase at the same rate as the assets managed. This paper examines the relationship between fund size as measured by assets under management and operating expense ratios for the periods 1992 to 1995 and 1995 to 1998. My hypothesis is that during these periods there have been significant increases in the average fund sizes and at the same time significant declines in the average operating expense ratios of mutual funds. Support of this would provide evidence of the existence of economies of scale. On the other hand, lack of support would suggest an absence of economies of scale or unwillingness of the mutual fund industry to pass the benefits of economies of scale along to their shareholders.

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.