In this paper, we use a comprehensive dataset of equity mutual funds covering 30 countries to study the effects of mutual fund size on fund fees. We show that the level of fees vary substantially for funds with different assets under management not only across countries, confirming the results in Khorana, Servaes, and Tufano (2008), but also within countries. We also show that competition in the fund management industry explain these differences. In countries with more competitive fund industries fees decline as funds get larger while, in countries where there is less competition in the fund industry, fund size increases fees. This is because investors are not flow-fee sensitive to larger funds in countries where mutual funds face little competition.

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Mutual fund fees,Mutual fund size,Flow-fee sensitivity,Mutual fund industry competition