Best buys and own brands: Investment platforms’ recommendations of mutual funds
Individuals increasingly buy mutual funds via online platforms, whose “best-buy” recommendations heavily influence flows. As intermediaries of mutual funds, platforms provide none of the unobservable interaction or intangible benefits of brokers, and so allow clean tests of the determinants, influen...
| Main Authors: | , , , |
|---|---|
| Format: | Journal article |
| Language: | English |
| Published: |
Oxford University Press
2020
|
| _version_ | 1797106817430454272 |
|---|---|
| author | Cookson, G Jenkinson, T Jones, H Martinez, JV |
| author_facet | Cookson, G Jenkinson, T Jones, H Martinez, JV |
| author_sort | Cookson, G |
| collection | OXFORD |
| description | Individuals increasingly buy mutual funds via online platforms, whose “best-buy” recommendations heavily influence flows. As intermediaries of mutual funds, platforms provide none of the unobservable interaction or intangible benefits of brokers, and so allow clean tests of the determinants, influence, and value of their fund recommendations. Using unique U.K. data, we find that platforms favor “own-brand” funds and those paying them a higher commission share. Investors discount own-brand recommendations, but not those paying high commission shares (which were not observable in the United Kingdom). A regulatory ban on commission sharing lowered costs and improved the informativeness of platform recommendations. |
| first_indexed | 2024-03-07T07:07:52Z |
| format | Journal article |
| id | oxford-uuid:84450809-3da8-4c6a-bfc1-0f41ac780b71 |
| institution | University of Oxford |
| language | English |
| last_indexed | 2024-03-07T07:07:52Z |
| publishDate | 2020 |
| publisher | Oxford University Press |
| record_format | dspace |
| spelling | oxford-uuid:84450809-3da8-4c6a-bfc1-0f41ac780b712022-05-20T09:33:50ZBest buys and own brands: Investment platforms’ recommendations of mutual fundsJournal articlehttp://purl.org/coar/resource_type/c_dcae04bcuuid:84450809-3da8-4c6a-bfc1-0f41ac780b71EnglishSymplectic ElementsOxford University Press2020Cookson, GJenkinson, TJones, HMartinez, JVIndividuals increasingly buy mutual funds via online platforms, whose “best-buy” recommendations heavily influence flows. As intermediaries of mutual funds, platforms provide none of the unobservable interaction or intangible benefits of brokers, and so allow clean tests of the determinants, influence, and value of their fund recommendations. Using unique U.K. data, we find that platforms favor “own-brand” funds and those paying them a higher commission share. Investors discount own-brand recommendations, but not those paying high commission shares (which were not observable in the United Kingdom). A regulatory ban on commission sharing lowered costs and improved the informativeness of platform recommendations. |
| spellingShingle | Cookson, G Jenkinson, T Jones, H Martinez, JV Best buys and own brands: Investment platforms’ recommendations of mutual funds |
| title | Best buys and own brands: Investment platforms’ recommendations of mutual funds |
| title_full | Best buys and own brands: Investment platforms’ recommendations of mutual funds |
| title_fullStr | Best buys and own brands: Investment platforms’ recommendations of mutual funds |
| title_full_unstemmed | Best buys and own brands: Investment platforms’ recommendations of mutual funds |
| title_short | Best buys and own brands: Investment platforms’ recommendations of mutual funds |
| title_sort | best buys and own brands investment platforms recommendations of mutual funds |
| work_keys_str_mv | AT cooksong bestbuysandownbrandsinvestmentplatformsrecommendationsofmutualfunds AT jenkinsont bestbuysandownbrandsinvestmentplatformsrecommendationsofmutualfunds AT jonesh bestbuysandownbrandsinvestmentplatformsrecommendationsofmutualfunds AT martinezjv bestbuysandownbrandsinvestmentplatformsrecommendationsofmutualfunds |