Differences in the misclassification of load and no-load mutual funds

Abstract: 

The purpose of this study was to extend the research on mutual fund investment
objective misclassification by analyzing the differences in investment objective
misclassification in domestic load and no-load mutual funds. Although there has
been significant research on open-end mutual fund misclassification, there has
been limited research, exploring the difference between misclassification in load
and no-load funds. Two research questions were answered: (a) are some load and
no-load mutual funds misclassified, and (b) is there a difference in
misclassification between load and no-load funds? Discriminant analysis was
used to identify misclassified funds. A difference in proportions test was used to
examine the difference in misclassification between load and no-load funds. The
results indicated that, consistent with the literature, there was misclassification in
both mutual fund samples. The load fund sample had a level of misclassification
greater than the no-load sample. The results indicate that in the load fund sample,
55% of the original grouped cases were misclassified. In the no-load fund sample,
53% of the original grouped cases were misclassified. According to the Z test for
the difference of proportions the null hypothesis, that the proportions of
misclassified load and no-loads funds is equal cannot be rejected. There is no
statistical difference in the proportions of no-load and load funds misclassified.

This publication has been peer reviewed.
Publication Type: 
Journal Article
Authors: 
William Stokes
Year of Publication: 
2013
Journal, Book, Magazine or Other Publication Title: 
The Exchange: A Journal of the Academic Forum
Volume: 
Volume 2
Edition: 
Number 1
Publication Language: 
English

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