A comparative study of the determinants of Belgian and Luxembourg mutual funds' ongoing charges

Abstract

This study consists in a comparative study of the determinants of Belgian and Luxembourg mutual funds' ongoing charges. In this study, a sample of UCITS funds domiciled in Belgium and Luxembourg are considered over the period 2014-2017. Its purpose is to highlight the determinants of the ongoing charges figure incurred by investors, the way it compares amongst the two countries under scrutiny and how the country of domicile interacts with determinants identified in the existing literature. The main results of this study suggest that Luxembourg UCITS benefit from a comparative cost-advantage on ongoing charges when compared with Belgian UCITS. Such a difference is partly attributable to the economies of experience found to be achieved exclusively by Luxembourg funds. It is also explained by the relatively lower increase in ongoing charges resulting from cross-border distribution. Yet, the results obtained suggest that this advantage is less prevalent for an investor choosing to invest through a sales intermediary and being charged a load.