Uninformed investors preferentially select distribution companies to purchase funds that suit their investment objectives, as they cannot evaluate each product themselves. Thus, their performance depends significantly on the quality of their chosen fund distributors’ product
portfolios. This study examines whether fund distributors provide better-performing funds to investors in return for distribution fees, and which companies outperform others. This paper differs from previous studies by applying firm-level rather than fund-level analyses through calculating the equal- and sales-weighted averages of the funds sold by each distribution company for all performance measures. The results demonstrate that after controlling the momentum effect fund distributors generate positive abnormal returns, however, with lower market power are superior to the others except market timing abilities.
Keywords: Equity Fund, Fund Distributor, Fund Performance, Investor Protection, Market Power
