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

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.