This white paper explores how mergers of mutual funds and exchange-traded funds (ETFs) are associated

DIVISION OF ECONOMIC AND RISK ANALYSIS 1 

When Funds Merge: What Happens 
to Fees? Evidence from Acquiring 
Mutual Funds and ETFs 
Ricardo A. Lopez Rago1 

_____________________________________________________________________________________ 

FEBRUARY 2026 

Abstract 
This white paper explores how mergers of mutual funds and exchange-traded funds (ETFs) are associated 
with changes in the fees paid by investors in funds that acquired another fund through a merger 
(acquiring funds), specifically expense ratios, management fees, and 12b-1 fees. The analysis uses data 
from 2010 to 2023 and focuses on over 1,800 U.S. mutual fund mergers that occurred between 2011 and 
2023, allowing for at least one year of pre-merger observations. The results suggest that mergers are 
generally associated with lower fees for investors in acquiring funds, and the size and type of those 
savings vary by fund type and the structure of the merger. Because acquired funds are absorbed and no 
longer report separately, the analysis does not estimate post-merger fee effects for those funds. 

1 This white paper is provided in the author’s official capacity as an economist in the Commission’s Division of Economic and Risk 
Analysis but does not necessarily reflect the views of the Commission, the Commissioners, or other members of the staff. The 
author thanks Joshua White, Oliver Richard, Alex Schiller, Samantha Croffie, Charles M. Woodworth, the Division of Investment 
Management and the Office of the General Counsel for helpful comments and suggestions. 



DIVISION OF ECONOMIC AND RISK ANALYSIS 2 

Introduction 
The mutual fund and ETF industry is one of the largest investment markets in the U.S., managing over 
$32.7 trillion in assets as of December 2024.2 By 2030, that number is expected to grow to nearly $39 
trillion.3 Today, nearly 130 million Americans (about 40% of the population) own mutual funds, ETFs, or 
other registered investment companies.4 

This white paper examines how fund mergers are associated with changes in the fees paid by investors in 
acquiring funds, specifically expense ratios, management fees, and 12b-1 fees. Using public data from 
2010 to 2023, it analyzes over 1,800 mergers between 2011 and 2023 and breaks them down by fund type 
(equity, bond, or mixed) and merger type (within the same fund family, across fund families, or between 
share classes).   

Mergers can lead to lower fees by exploiting economies of scale and streamlining operations.5 But they 
could also reduce competition, which might result in higher fees. Prior studies have examined fee changes 
following fund mergers, generally finding that expense ratios decline, though the timing and magnitude 
vary.6 This paper extends that work by analyzing more recent data and a broader dataset. 

Importantly, this paper focuses only on fees, expense ratios, management fees, and 12b-1 fees, not on 
overall investor returns. While lower fees may benefit investors, they do not necessarily guarantee higher 
net returns, as performance can be affected by factors such as decreasing returns to scale or post-merger 
inefficiencies. The analysis below suggests that many mergers are associated with lower fees for investors 
in acquiring funds, and the size and nature of those associations vary by fund type and the structure of the 
merger. Bond and mixed funds tend to see the largest fee reductions, while equity funds show reductions 
primarily in cross-family mergers. 

2 See U.S. Sec. & Exch. Comm’n, Div. of Inv. Mgmt., Registered Fund Statistics: Form N-PORT Data, Period Ending December 
2024 (May 8, 2025), tbl. 2.3, https://www.sec.gov/files/investment/im-investment-registered-fund-statistics-20250508.pdf. 
3 PwC estimates that the size of the U.S. mutual fund industry will reach $38 trillion in 2030, while Mordor Intelligence projects this 
number to reach $39.22 trillion in 2023. See PricewaterhouseCoopers, Mutual Funds 2030: Rising Expectations and 
Response (2023), https://www.pwc.com/us/en/industries/financial-services/library/pwc-2030-mutual-fund-outlook.pdf; Mordor 
Intelligence, U.S. Mutual Fund Industry Size & Share Analysis – Growth Trends & Forecasts (2025– 
2030) (2025), https://www.mordorintelligence.com/industry-reports/us-mutual-funds-industry.   
4 These numbers include open-end mutual funds, ETFs, traditional closed-end funds, and unit investment trusts. See Inv. Co. 
Inst., 2024 Investment Company Fact Book: A Review of Trends and Activities in the Investment Company 
Industry (2024), https://www.ici.org/system/files/2024-05/2024-factbook.pdf.   
5 Joseph Chen et al., Does Fund Size Erode Mutual Fund Performance? The Role of Liquidity and Organization, 94 Am. Econ. 
Rev. 1276, 1276–1302 (2004), https://www.jstor.org/stable/3592823.   
6 See Narayanan Jayaraman, Ajay Khorana & Edward Nelling, An Analysis of the Determinants and Shareholder Wealth Effects of 
Mutual Fund Mergers, 57 J. Fin. 1521, 1521–61 (2002), https://www.jstor.org/stable/2697786; and Patrick McLemore, Do Mutual 
Funds Have Decreasing Returns to Scale? Evidence from Fund Mergers, 54 J. Fin. & Quantitative Analysis 1683, 1683–1711 
(2019), https://doi.org/10.1017/S0022109018001023. 

https://doi.org/10.1017/S0022109018001023
https://www.jstor.org/stable/2697786
https://www.jstor.org/stable/3592823
https://www.ici.org/system/files/2024-05/2024-factbook.pdf
https://www.mordorintelligence.com/industry-reports/us-mutual-funds-industry
https://www.pwc.com/us/en/industries/financial-services/library/pwc-2030-mutual-fund-outlook.pdf
https://www.sec.gov/files/investment/im-investment-registered-fund-statistics-20250508.pdf


DIVISION OF ECONOMIC AND RISK ANALYSIS 3 

Data and Sample Construction 
This white paper uses data from the Center for Research in Security Prices (CRSP) Survivor-Bias-Free 
U.S. Mutual Fund Database (updated in May 2025),7 which provides detailed information on fund 
characteristics, performance, and organizational changes.8 The analysis uses data from 2010 to 2023 and 
includes mergers from 2011 to 2023 to ensure at least one year of pre-merger data is available for each 
case.9 The CRSP Survivor-Bias-Free U.S. Mutual Fund Database includes both active and inactive funds, 
preserving historical data on funds that were liquidated or merged.10 This approach helps eliminate 
survivorship bias by ensuring that poorly performing or high-fee funds that exited the market are still 
represented in the data prior to becoming inactive. As a result, the analysis reflects the full distribution of 
fund outcomes over time, rather than only those of surviving funds.11 

The analysis focuses on acquiring mutual funds and exchange traded funds.12 It removes any records with 
clearly erroneous values, such as negative expense ratios or invalid portfolio allocation percentages.13 

These steps help produce a clean and consistent set of traditional mutual funds and ETFs.14   

To identify mergers, this white paper tracks funds that became inactive and uses unique identifiers from 
the CRSP dataset to link them to the acquiring fund. To avoid confusion from overlapping events, the 
analysis includes only acquiring funds that completed a single merger during the sample period. While 
this restriction reduces the sample size, it helps focus on fee changes associated with a single merger and 
provides a more conservative, but cleaner, estimate of its impact.15 Acquired funds are excluded from the 
regression analysis,16 as are acquiring funds involved in multiple mergers. Similar funds that did not 
acquire another fund (non-acquiring funds) serve as the control group. This design helps approximate the 
effect of mergers on acquiring fund fees, though it does not capture the experience of acquired funds or 
the aggregate investor impact of mergers. While acquired funds cannot be tracked post-merger due to data 

7 Center for Research in Sec. Prices (CRSP), Survivor-Bias-Free US Mutual Fund Database, available at 
https://www.crsp.org/research/crsp-survivor-bias-free-us-mutual-funds/ (2025). 
8 For purposes of this paper, ‘fund’ refers to U.S. registered mutual funds and exchange-traded funds (ETFs). The CRSP Survivor-
Bias-Free U.S. Mutual Fund Database includes both mutual funds and ETFs as well as other products such as exchange-traded 
notes (ETNs) and variable annuities. 
9 Although the May 2025 version of the CRSP database includes preliminary data for 2024, an examination of that data revealed it to 
be incomplete and not yet finalized. For this reason, 2024 data was excluded from the analysis to ensure accuracy and consistency. 
10 Center for Research in Sec. Prices (CRSP), Survivor-Bias-Free US Mutual Fund Database, available at 
https://www.crsp.org/research/crsp-survivor-bias-free-us-mutual-funds/ (2025). 
11 Id.   
12 In other words, the analysis excludes exchange-traded notes (ETNs) and variable annuities, which operate under different rules 
and fee structures than mutual funds and ETFs. 
13 Invalid portfolio allocation percentages refer to any allocation variable (e.g., percent in stocks, bonds, cash) that is less than zero. 
14 See Appendix A for more details on the data cleaning process.   
15 This restriction is conservative because it avoids potential bias from funds that engage in multiple mergers, which may be 
systematically different, such as being larger, more complex, or more aggressive in fee restructuring. By focusing only on single-
merger events, the analysis reduces the risk of overstating the average fee impact and helps ensure that the estimated effect is not 
driven by unusually active acquiring funds. 
16 Because acquired funds are absorbed and no longer report separately post-merger, their fee trajectories cannot be tracked and 
are excluded from the analysis. 

https://www.crsp.org/research/crsp-survivor-bias-free-us-mutual-funds
https://www.crsp.org/research/crsp-survivor-bias-free-us-mutual-funds


DIVISION OF ECONOMIC AND RISK ANALYSIS 4 

limitations, future research could explore indirect methods, such as aggregating pre-merger characteristics 
of both funds, to estimate post-merger outcomes.    

The analysis groups mergers into three categories based on the relationship between the acquiring and 
acquired funds.17 “Within-family” mergers involve funds from the same fund family or fund complex and 
do not involve the consolidation of different share classes of the same fund. “Cross-family” mergers 
involve funds from different fund families. “Share class” consolidations represent the combination of 
different share classes within the same fund. The analysis does not explicitly adjust for fund conversions 
or the introduction of new share classes over time. While the CRSP dataset includes share class 
identifiers, distinguishing between organic share class creation and structural changes such as conversions 
or reclassifications is not always straightforward. Future work could explore this dimension more 
systematically.18 

Figure 1 shows the number of mergers by type between 2011 and 2023. Within-family mergers are the 
most common, accounting for 65.3% of single-merger events, followed by cross-family mergers at 19.2% 
and share-class consolidations at 15.5%.   

Figure 1. Number of Mergers by Type (2011-2023) 

Author’s calculations using data from the CRSP Mutual Fund Database. 
Note: Numbers reflect single merger events; repeat acquisitions by the 
same fund during the period are not included. 

17 See Appendix B for more details on variable constructions, including the different merger variables discussed in this white paper. 
18 This analysis does not examine the impact of hybrid structures that combine mutual fund and ETF share classes, such as those 
historically used by Vanguard. While these structures were rare during the review period, they may influence fee dynamics and 
represent an interesting area for future research. 



DIVISION OF ECONOMIC AND RISK ANALYSIS 5 

Figure 2 shows the number of fund mergers per year over the period 2011–2023. The annual average was 
approximately 142 mergers, with some variation across years. These numbers reflect single merger events 
and do not represent the total number of mergers in the mutual fund industry, as they exclude cases where 
a fund merged more than once during the period. 

Figure 2. Number of Mergers by Year (2011-2023) 

Author’s calculations using data from the CRSP Mutual Fund Database. 
Note: Numbers reflect single merger events; repeat acquisitions by the 
same fund during the period are not included. 

This paper also classifies funds by investment style. “Equity” funds hold mostly stocks,19 “bond” funds 
hold mostly fixed income assets,20 and “mixed” funds hold a combination of both.21 This classification 
allows the analysis to examine whether different types of funds experience different changes in fees after 
a merger. Table 1 presents the distribution of mergers across fund types and merger types.22 

19 Equity funds are defined as those that, on average over 2010–2023, hold at least 80% of assets in equities and less than 10% in 
fixed income. The 80% threshold aligns with the SEC Names Rule, while the <10% limit ensures clear separation from mixed funds. 
20 Bond funds are defined as those that, on average over 2010–2023, hold at least 80% of assets in fixed income (consistent with 
the SEC Names Rule) and less than 10% in equities to ensure clear separation from mixed funds. 
21 Mixed funds are defined as those that, on average over 2010–2023, do not meet the criteria for equity or bond funds—that is, they 
hold less than 80% in equities and less than 80% in fixed income. This category captures funds with more balanced or diversified 
allocations. 
22 The distribution of mergers by fund and merger type remained relatively stable for most categories. The share of pure equity funds 
declined from 56.8% in 2011–2016 to 49.0% in 2017–2023, while pure bond funds increased from 16.6% to 20.0%, and mixed funds 
from 26.5% to 30.9%. Share class consolidations rose from 12.2% to 19.1%. In contrast, cross-family mergers increased from 9.6% 
to 29.8%, and within-family mergers declined from 78.0% to 49.0%. 



DIVISION OF ECONOMIC AND RISK ANALYSIS 6 

Table 1. Distribution of Mergers by Fund Type and Merger Type 

Equity a Bond b Mixed c Total 

Within-Family d 687 192 326 1,205 

Cross-Family e 180 59 116 355 

Share Class f 113 85 88 286 

Total 980 336 530 1,846 

a ≥80% average equity holdings and <10% fixed income over the period 2010-2023 
b ≥80% average fixed income holdings and <10% equity over the period 2010-2023 
c Funds not meeting equity or bond criteria 
d Same fund family, different funds 
e Different fund families 
f Same fund, different share classes 

To estimate fee changes associated with mergers, this analysis uses a statistical method called difference-
in-differences (DiD). This approach compares fees over time for acquiring funds to fees over time for 
non-acquiring funds. The goal is to distinguish fee changes associated with mergers from broader market 
trends or differences between funds. 

For example, simply comparing a fund’s fees before and after a merger could be misleading if fees were 
already trending downward across the industry. The DiD approach used in this analysis addresses this by 
using a control group of non-acquiring funds that serve as a benchmark. If both acquiring and non-
acquiring funds were on similar paths before the merger, any difference in their fee trends post-merger 
can be more plausibly linked to the merger. The empirical analysis employs fund-type-specific control 
groups, where treated funds are compared only to control funds of the same type: equity funds that 
undergo mergers are compared to non-acquiring equity funds, bond funds to non-acquiring bond funds, 
and mixed funds to non-acquiring mixed funds. This fund-type matching aims to improve comparability 
between treatment and control groups with respect to fundamental investment characteristics and 
regulatory constraints.23 

23 Within each fund type, the analysis does not further subdivide control groups by merger type (within-family, cross-family, and 
share class mergers). This decision reflects both economic and statistical considerations. From an economic perspective, there is 
no clear theoretical basis for why specific subsets of non-acquiring funds within a given fund type would provide more appropriate 
counterfactuals for different merger types. Unlike fund classifications based on objective portfolio holdings, merger type categories 
do not reflect inherent characteristics that would make certain non-acquiring funds more suitable controls. For instance, non-
acquiring equity funds in unrelated families are not necessarily more comparable to cross-family equity merger participants than 
non-acquiring equity funds within the same family. From a statistical standpoint, subdividing control groups by both fund type and 
merger type would substantially reduce sample sizes, potentially leading to underpowered tests and imprecise estimates, 
particularly for less common combinations such as cross-family bond fund mergers. The current approach maximizes statistical 
power within each fund type while allowing merger effects to vary through interaction terms, providing robust estimates of differential 
impacts across merger types without imposing potentially arbitrary restrictions on control group composition beyond the 
economically meaningful fund-type matching. Regarding sectoral or geographic differences, these are often nested within fund type 
classifications and are not consistently disclosed across funds. By matching on fund type, the analysis already mitigates much of the 
heterogeneity in these dimensions. Future work could explore more granular market definitions where data availability permits. 



DIVISION OF ECONOMIC AND RISK ANALYSIS 7 

The analysis includes fund fixed effects, which control for any unchanging characteristics of each fund, 
such as its investment strategy, management style, or brand reputation.24 The model also includes year 
fixed effects, which account for broader industry-wide changes that affect all funds in a given year, such 
as regulatory shifts, market conditions, or technological improvements. 

A key assumption behind the DiD approach is the “parallel trends assumption.” It means that, in the 
absence of a merger, the fees of acquiring funds would have followed the same general trend as those of 
non-acquiring funds. If this assumption holds, then any divergence in trends after the merger can be 
interpreted as consistent with an effect of mergers, though caution is warranted.25 The analysis tests this 
assumption by examining whether the two groups had similar fee trajectories before the merger, and the 
results support its validity (see Appendix D, Table D7 for estimation results).26   

This combination of fund fixed effects, year fixed effects, and a carefully selected control group makes 
the DiD approach especially well-suited for assessing fee changes around mergers in a complex and 
evolving market. Because acquisition decisions may reflect unobservable factors, the estimates should be 
interpreted as associations rather than definitive causal effects. 

Fee Changes Following Fund Mergers 

Expense Ratios 
Expense ratios represent the annual fees that mutual funds charge to cover their operating costs, expressed 
as a percentage of assets under management (AUM). These costs include management fees, 12b-1 fees, 
certain shareholder service expenses, custodial expenses, legal expenses, accounting expenses, transfer 
agent expenses, and other administrative expenses.27 

These fees directly reduce investor returns. For example, a fund with a 1% expense ratio charges $10 
annually for every $1,000 invested. That means that if the fund earns a 7% gross return, the investor 
receives a 6% net return. Over time, even small differences in expense ratios can significantly affect long-
term wealth accumulation due to compounding.28 

24 Fund fixed effects are likely to be effective in capturing investment strategy because the treated group in the estimation sample 
consists only of acquiring funds, which are classified based on their long-term average portfolio holdings (e.g., ≥80% equity). This 
helps ensure that each fund’s core investment style remains stable over time. Moreover, treated funds are compared only to non-
acquiring control funds of the same type (equity, bond, or mixed), which minimizes differences in investment strategy between 
groups. While some mergers may induce changes in strategy, particularly when the acquired fund has a different asset mix, these 
cases are likely limited given the exclusion of acquired funds and the fund-type-specific design. Nonetheless, potential post-merger 
strategy drift remains a limitation and a direction for future research. 
25 See, e.g., Joshua D. Angrist & Jörn-Steffen Pischke, Mostly Harmless Econometrics: An Empiricist’s Companion (Princeton Univ. 
Press 2009). 
26 See Appendix C for more details on this test and the models. 
27 See U.S. Sec. & Exch. Comm’n, Mutual Fund and ETF Fees and Expenses – Investor Bulletin, 
Investor.gov, https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/mutual-
fund-and-etf-fees-and-expenses-investor-bulletin (July 23, 2025).   
28 See U.S. Sec. & Exch. Comm’n, Office of Inv. Educ. & Advocacy, How Fees and Expenses Affect Your Investment Portfolio, SEC 
Investor Bulletin, SEC Pub. No. 164 (Feb. 2014), https://www.sec.gov/investor/alerts/ib_fees_expenses.pdf.   

https://www.sec.gov/investor/alerts/ib_fees_expenses.pdf
https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/mutual
https://Investor.gov


DIVISION OF ECONOMIC AND RISK ANALYSIS 8 

In theory, mergers can reduce, increase, or leave the expense ratios of acquiring funds unchanged. For 
example, mergers may lower costs by increasing fund size and allowing the combined fund to benefit 
from economies of scale. Larger funds can spread fixed costs over a broader asset base,29 and eliminate 
redundant operations.30 In contrast, mergers may reduce competition in the market, potentially weakening 
the pressure to keep fees low.31 

Previous research suggests that fund mergers are associated with reductions in expense ratios. However, 
these studies do not employ a DiD design, leaving open the possibility that selection and pre-existing 
trends contribute to the observed fee declines.32 This paper builds on that literature by using a larger and 
more recent dataset (2011–2023), applying a DiD approach, and exploring heterogeneity by fund type and 
merger structure, providing new evidence on which mergers are associated with the greatest fee 
reductions. 

Table 2 shows unweighted mean expense ratios for acquiring and acquired mutual funds involved in 
mergers between 2011 and 2023. The table organizes the data by fund type and merger timing. While 
these summary statistics do not establish causal relationships, they provide a descriptive view of fee levels 
before and after mergers. On average, acquired funds had higher expense ratios prior to the merger than 
the acquiring funds.33 Although acquired funds are not observed after the merger (they are absorbed into 
the acquiring fund) the fact that post-merger acquiring funds (i.e., the consolidated funds) have lower 
expense ratios than pre-merger acquired funds suggests that investors in the acquired funds may have 
experienced lower fees,34 assuming they remained invested in the merged structure. This pattern is 
consistent across all fund types, with the largest differences observed in equity and mixed funds. 

Acquiring funds also experienced a modest decline in expense ratios following a merger. As shown in 
Table 2, the average expense ratio for acquiring funds decreased from 1.11% before a merger to 1.06% 
afterward. This downward trend is evident across all fund types, with the most notable reduction observed 
in mixed funds (from 1.00% to 0.89%). These changes may reflect cost efficiencies realized through 
consolidation or strategic fee adjustments to enhance competitiveness. From an expense standpoint, the 

29 There is empirical evidence documenting that larger funds tend to have lower expense ratios suggesting that funds may be able to 
enjoy the benefits of economies of scale. See, e.g., Chen et al. (2004). See supra note 5. 
30 It is possible, however, that the fund might use the cost savings to increase marketing efforts instead of passing the savings on to 
investors in the form of lower expense ratios. See Jayaraman, et al. (2002). See supra note 6. 
31 This concern is supported by Ordover, Sykes, and Willig (1982), who argue that mergers can increase market power not only by 
raising concentration, as measured by the Herfindahl-Hirschman Index (HHI), but also by reducing interfirm rivalry. They argue that 
changes in HHI can be informative about the effects of mergers, but only when interpreted alongside other evidence such as 
demand elasticity, the presence of a competitive fringe, and the nature of firm interactions. While this paper focuses on fund-level 
outcomes, future research could explore how changes in investor cost proxies (e.g., expense ratios, management fees) relate to 
changes in market concentration following mergers. See Janusz A. Ordover, Alan O. Sykes & Robert D. Willig, Herfindahl 
Concentration, Rivalry, and Mergers, 95 Harv. L. Rev. 1857, 1857–74 (1982), https://doi.org/10.2307/1340652. 
32 Jayaraman, et al. (2002), see supra note 6, find that expense ratios decline following mergers, but the effect becomes statistically 
significant only two years after the merger. Their study uses a sample of 742 mutual fund mergers between 1994 and 1997 and 
finds that poor past performance and high expense ratios are key drivers of within-family mergers. McLemore (2019), see supra 
note 6, analyzes mutual fund mergers from 2000 to 2014 and finds that acquiring funds experience a decline in expense ratios both 
before and after the merger. The study attributes the decline to economies of scale and liquidity constraints. 
33 All differences are statistically significant at the 1% level based on two-sample t-tests using unweighted means. 
34 All differences are statistically significant at the 1% level based on two-sample t-tests using unweighted means. 

https://doi.org/10.2307/1340652


DIVISION OF ECONOMIC AND RISK ANALYSIS 9 

data suggest that mergers may benefit not only investors from acquired funds but also those already 
invested in the acquiring funds. 

Table 2. Summary Statistics for Acquired and Acquiring Funds: Expense Ratios (Unweighted Means, 
Percentage) 

Acquired Before Acquiring Before Acquiring After 

All 1.28 1.11 1.06 

Equity 1.40 1.23 1.17 

Bond 1.15 0.88 0.87 

Mix 1.15 1.00 0.89 

Numbers represent unweighted mean fee levels (in percentage) for mutual funds involved in mergers between 2011 and 2023. 
Acquired Before: Acquired funds in the pre-merger period. Acquiring Before: Acquiring funds in the pre-merger period. Acquiring 
After: Acquiring funds in the post-merger period. All differences in mean expense ratios between acquired funds (pre-merger) and 
acquiring funds (both pre- and post-merger) are statistically significant at the 1% level based on two-sample t-tests using 
unweighted means. 

Table 3 presents the estimated effect of mergers on expense ratios in acquiring funds. On average, 
mergers reduce expense ratios by 0.0177 pp, or 1.77 basis points (bps).35 For example, a fund with a 
1.00% expense ratio would see it fall to 0.9823% after a merger. The largest reductions occur in mixed 
funds with a 2.85 bps decrease and bond funds with a decrease of 1.82 bps, while equity funds show a 
smaller decline of 1.27 bps. The weaker effect for equity funds may reflect the fact that they already 
operate at relatively efficient scales or that they face structural costs that are harder to reduce. 

The results also vary by merger type. Cross-family and share class mergers produce the largest reductions 
in expense ratios in acquiring funds: a 2.26-bps fall in both cases, while within-family mergers show no 
statistically significant effect overall. The most pronounced reductions in expense ratios occur in cross-
family mergers involving mixed funds (a decrease of 4.61 bps) and share class consolidations involving 
bond funds (a decrease of 5.03 bps).36 

35 The hypothesis of equal trends before acquisition between acquiring and non-acquiring funds cannot be rejected (see infra Table 
D7 in Appendix D). 
36 Because some mergers occur near the end of the sample period, the analysis may not fully capture their long-term effects. While 
this is a possibility, additional analysis, not reported here, indicates that most fee adjustments occur in the year of the merger and 
the following year, with little change thereafter. This suggests that the main effects are typically realized within a short window after 
the merger. 



DIVISION OF ECONOMIC AND RISK ANALYSIS 10 

Table 3. Fee Changes Following Fund Mergers: Expense Ratio (Percentage Points) 

All Funds Equity Bond Mixed 

Acquisition -0.0177 -0.0127 -0.0182 -0.0285 

Cross-Family -0.0226 -0.0143 -0.0150 -0.0461 

Within-Family − − -0.0135 − 

Share Class -0.0226 − -0.0503 − 

Numbers represent the average change, in percentage points (pp), in the expense ratio of acquiring funds after a merger, relative to 
funds that did not undergo a merger, controlling for observable fund characteristics and fixed effects. For example, a 0.0177 pp 
reduction in the expense ratio implies that funds with a 1% expense ratio would have an expense ratio of 0.9823% (= 1-0.0177) after 
a merger. All reported estimates are significant at least at the 5% significance level. The symbol “−” indicates no statistically 
significant effect at the 5% level. The regressions for all funds are based on 238,483 fund-year observations from 39,598 unique 
funds. The sample includes 132,808 observations for pure equity funds (20,202 funds), 51,401 observations for pure bond funds 
(8,771 funds), and 54,274 observations for mixed funds (10,625 funds). 

While these reductions may seem modest, they provide evidence that mergers are associated with lower 
fees, which may benefit investors..37 In an industry where expense ratios have already been trending 
downward,38 fund consolidations can be associated with fee savings to investors, although the benefits 
depend on the type of fund and the structure of the merger. However, fee reductions alone do not 
guarantee improved investor outcomes. The net benefit also depends on post-merger fund performance 
and investor-facing policies, such as short-term trading restrictions or minimum holding periods imposed 
by fund families to discourage rapid turnover, which are not analyzed in this paper.39 

Management Fees 
Management fees are the portion of a fund’s expenses paid to its investment adviser (or affiliated firms) 
for managing the portfolio.40 These fees typically cover portfolio manager compensation, investment 
research, trading decisions, and risk management. They are one of the largest components of a fund’s 
overall expense ratio.41 Mergers may reduce management fees by eliminating overlapping functions, such 
as duplicative research teams or trading operations, especially when two funds with similar strategies are 
combined. 

37 For example, the estimated effect of -0.0285 pp on mixed funds from Table 2 means that an investor with a $100,000 invested in a 
mixed fund, with an annual return of 6%, would save about $1,400, $3,500, and $7,700 over a period of 20, 30, and 40 years 
respectively. Note that these estimates assume constant fund performance post-merger, but mergers may also decrease fund 
returns if they experience decreasing returns, potentially offsetting some of the benefits from lower fees. Therefore, the net effect on 
investors will ultimately depend on the balance between fees savings and performance changes. 
38 Duval & Johnson (2024) document that from 1996 to 2023, the expense ratios of equity mutual funds decreased by 60%, while for 
bond funds they declined by 56%. James Duvall & Alex Johnson, Trends in the Expenses and Fees of Funds, 2023 30 ICI Research 
Perspective, Vol. 30, No. 2 (Mar. 2024), available at https://www.ici.org/files/2024/per30-02.pdf.    
39 Some mutual fund families impose short-term trading fees or restrict investors from repurchasing shares within a certain period 
after redemption (e.g., 30–90 days), commonly referred to as round-trip or frequent trading restrictions. These are not formal 
redemption restrictions but may affect investor behavior. See U.S. Sec. & Exch. Comm’n, Office of Inv. Educ. & Advocacy, Investor 
Bulletin: Mutual Fund Fees and Expenses, SEC Pub. No. 162 (May 2014), https://www.sec.gov/files/ib_mutualfundfees.pdf. 
40 See Investor Bulletin: Mutual Fund Fees and Expenses, supra note 39. 
41 Inv. Co. Inst., ICI Investor Awareness Series – Frequently Asked Questions About Mutual Fund Fees (2024), 
https://www.ici.org/system/files/attachments/pdf/bro_mf_fees_faq_p.pdf. 

https://www.ici.org/system/files/attachments/pdf/bro_mf_fees_faq_p.pdf
https://www.sec.gov/files/ib_mutualfundfees.pdf
https://www.ici.org/files/2024/per30-02.pdf


DIVISION OF ECONOMIC AND RISK ANALYSIS 11 

Table 4 reports unweighted mean management fees for acquiring and acquired mutual funds involved in 
mergers between 2011 and 2023, segmented by fund type and merger timing. These descriptive statistics 
offer a snapshot of fee structures around the time of mergers, without implying causality. In general, 
acquired funds exhibited slightly higher management fees than acquiring funds prior to the merger.42 The 
lower average fees in the post-merger acquiring funds (which represent the consolidated entities) suggest 
that investors from the acquired funds may have experienced modest fee reductions, provided they 
remained in the merged fund. The differences are most notable in equity and mixed funds, while bond 
funds show little to no difference.43 

In addition to the observed fee reductions for investors from acquired funds, acquiring funds themselves 
also show a modest decline in average management fees following the merger. As shown in Table 4, the 
mean fee for acquiring funds decreased from 0.61% pre-merger to 0.57% post-merger. This pattern is 
consistent across fund types, with the most pronounced drop seen in mixed funds (from 0.54% to 0.43%). 
These reductions may reflect economies of scale or competitive pressures to align fees downward after 
consolidation. The data suggest that mergers may offer cost efficiencies not only to absorbed investors but 
also within the acquiring fund’s broader fee structure. 

Table 4. Summary Statistics for Acquired and Acquiring Funds: Management Fees (Unweighted Means, 
Percentage) 

Acquired Before Acquiring Before Acquiring After 

All 0.60 0.61 0.57 

Equity 0.68 0.70 0.65 

Bond 0.45 0.45 0.43 

Mix 0.55 0.54 0.43 

Numbers represent unweighted mean fee levels (in percentage) for mutual funds involved in mergers between 2011 and 2023. 
Acquired Before: Acquired funds in the pre-merger period. Acquiring Before: Acquiring funds in the pre-merger period. Acquiring 
After: Acquiring funds in the post-merger period. All differences in mean management fees between acquired funds (pre-merger) 
and acquiring funds (both pre- and post-merger) are statistically significant at the 1% level based on two-sample t-tests using 
unweighted means, except for bond and mixed funds when comparing acquired funds to acquiring funds in the pre-merger period, 
where the differences are not statistically significant. 

Table 5 presents the estimated effects of mergers on management fees of acquiring funds. On average, 
mergers reduce management fees by 0.0112 pp, or 1.12 bps.44 The largest reductions are observed in 
mixed funds, with a decrease of 4.49 bps, followed by bond funds with a 1.41 bps decrease. In contrast, 
equity funds show no statistically significant change. This pattern closely mirrors the results for expense 

42 The differences are statistically significant at the 1% level based on two-sample t-tests using unweighted means for all and for 
equity funds. 
43 All differences are statistically significant at the 1% level based on two-sample t-tests using unweighted means. 
44 The hypothesis of equal trends before acquisition between acquiring and non-acquiring funds cannot be rejected (see infra Table 
D7 in Appendix D). 



DIVISION OF ECONOMIC AND RISK ANALYSIS 12 

ratios and suggests that equity funds may already operate at efficient scale or face structural costs that are 
harder to reduce. 

The effects also vary by merger type. Across all acquiring funds, share class consolidations produce the 
largest overall reduction in management fees: a decrease of 2.12 bps, followed by cross-family mergers 
with a 1.15-bps decrease and within-family mergers with a decrease of 0.79 bps. The most pronounced 
effect is for cross-family mergers involving mixed funds, which see a reduction of 5.72 bps. Another 
notable result is the 3.69 bps reduction in share class consolidations involving bond funds. 

Table 5. Fee Changes Following Fund Mergers: Management Fees (Percentage Points) 

All Funds Equity Bond Mixed 

Acquisition -0.0112 − -0.0141 -0.0449 

Cross-Family -0.0115 − − -0.0572 

Within-Family -0.0079 − -0.0162 -0.0262 

Share Class -0.0212 − -0.0369 -0.0285 

Numbers represent the average change, in percentage points, in management fees of acquiring funds after a merger, relative to 
other funds that did not undergo a merger, controlling for observable fund characteristics and fixed effects. All reported estimates are 
significant at least at the 5% significance level. The symbol “−” indicates no statistically significant effect at the 5% level. The 
regressions for all funds are based on 205,355 fund-year observations from 33,812 unique funds. The sample includes 116,150 
observations for pure equity funds (17,542 funds), 46,553 observations for pure bond funds (7,979 funds), and 42,652 observations 
for mixed funds (8,291 funds). 

These results are consistent with the possibility that mergers are associated with operational efficiencies 
that may benefit investors, particularly in bond and mixed funds. However, as with expense ratios, the 
benefits are not uniform across all fund types or merger types. Equity funds, in particular, appear less 
likely to experience fee reductions following a merger. 

12b-1 Fees 
12b-1 fees are annual charges that cover a fund’s distribution and shareholder service expenses.45 Under 
FINRA rules, 12b-1 fees are capped at 1% annually, with sub-limits of 0.75% for marketing and 0.25% 
for servicing (for no-load funds, FINRA rules cap the fee at 0.25%). These limits apply regardless of how 
the fees are allocated, and funds cannot exceed these thresholds. While most funds do not charge the 
maximum permitted amount, the cap constrains potential variation in these fees.46 They help pay for 

45 See U.S. Sec. & Exch. Comm’n, Mutual Fund and ETF Fees and Expenses – Investor Bulletin, Investor.gov (July 23, 
2025), https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/mutual-fund-
and-etf-fees-and-expenses-investor-bulletin. 
46 These fees are capped by FINRA Rule 2341, which prohibits FINRA member broker-dealers from offering or selling the shares of 
a fund that imposes sales charges that are deemed excessive under the rule.   

https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/mutual-fund
https://Investor.gov


DIVISION OF ECONOMIC AND RISK ANALYSIS 13 

brokerage commissions, marketing and advertising, shareholder support, and platform access fees that 
make funds available through intermediaries.47 

Mergers may reduce 12b-1 fees by giving the combined fund gains bargaining power or scale advantages 
in distribution. However, these fees are often governed by ongoing distribution arrangements that are 
embedded in fund structures and may be difficult to renegotiate.48 In addition, as mentioned earlier, 
FINRA rules cap 12b-1 fees at 1% annually (0.75% for marketing and 0.25% for servicing), which limits 
the scope for fee reductions. In practice, most funds charge well below these limits, particularly no-load 
funds, so mergers have little room to affect these fees. 

Table 6 shows unweighted mean 12b-1 fees for acquiring and acquired mutual funds involved in mergers 
between 2011 and 2023, categorized by fund type and merger timing. These descriptive statistics provide 
an idea on how 12b-1 fees differ across fund roles and time periods surrounding mergers. Prior to the 
merger, acquired funds consistently had higher 12b-1 fees than acquiring funds.49 The lower average 12b-
1 fees in the post-merger acquiring funds suggest that investors from the acquired funds may have seen a 
meaningful reduction in these fees, assuming they remained in the consolidated fund.50 

Acquiring funds also experienced a slight reduction in 12b-1 fees following the merger. As shown in 
Table 6, the average 12b-1 fee for acquiring funds declined from 0.61% pre-merger to 0.57% post-merger. 
This trend is consistent across all fund types, with the most notable decrease observed in mixed funds 
(from 0.54% to 0.43%). These reductions may reflect post-merger cost rationalization or strategic fee 
alignment across the consolidated fund lineup. As such, the data suggest that mergers may be associated 
with modest fee benefits not only for investors from acquired funds but also for those already invested in 
the acquiring funds. 

47 12b-1 fees took their name from the SEC rule that authorizes a fund to pay them. The rule allows a fund to pay distribution fees 
out of fund assets only if the fund has adopted a plan (12b-1 plan) authorizing their payment. See Mutual Fund Fees and Expenses, 
Investor.gov, https://www.investor.gov/introduction-investing/investing-basics/glossary/mutual-fund-fees-and-expenses (last visited 
Aug. 18, 2025).   
48 See, e.g., Investment Company Institute, Comment Letter on Mutual Fund Distribution Fees; Confirmations (SEC File No. S7-15-
10) (Nov. 5, 2010), https://www.sec.gov/comments/s7-15-10/s71510-1.pdf (discussing the rigidity of distribution agreements and the 
difficulty of renegotiating dealer contracts). 
49 All differences are statistically significant at the 1% level based on two-sample t-tests using unweighted means. 
50 All differences are statistically significant at the 1% level based on two-sample t-tests using unweighted means. 

https://www.sec.gov/comments/s7-15-10/s71510-1.pdf
https://www.investor.gov/introduction-investing/investing-basics/glossary/mutual-fund-fees-and-expenses
https://Investor.gov


DIVISION OF ECONOMIC AND RISK ANALYSIS 14 

Table 6.   Summary Statistics for Acquired and Acquiring Funds: 12b-1 Fees (Unweighted Means, 
Percentage) 

Acquired Before Acquiring Before Acquiring After 

All 0.64 0.39 0.45 

Equity 0.63 0.43 0.48 

Bond 0.67 0.32 0.38 

Mix 0.63 0.39 0.42 

Numbers represent unweighted mean fee levels (in percentage) for mutual funds involved in mergers between 2011 and 2023. 
Acquired Before: Acquired funds in the pre-merger period. Acquiring Before: Acquiring funds in the pre-merger period. Acquiring 
After: Acquiring funds in the post-merger period. All differences in mean 12b-1 fees between acquired funds (pre-merger) and 
acquiring funds (both pre- and post-merger) are statistically significant at the 1% level based on two-sample t-tests using 
unweighted means. 

Table 7 presents the estimated effects of mergers on 12b-1 fees in acquiring funds. Most of the results are 
not statistically significant, meaning there is no clear evidence of a consistent change in these fees after a 
merger. The one exception is for bond funds, which show a small but statistically significant increase of 
0.36 bps (cross-family mergers primarily drive the increase in bonds’ 12b-1 fees). 

Table 7. Fee Changes Following Fund Mergers: 12b-1 Fees (Percentage Points) 

All Funds Equity Bond Mixed 

Acquisition − − 0.0036 − 

Cross-Family − − 0.0044 − 

Within-Family − − − − 

Share Class − − − − 

Numbers represent the average change, in percentage points, in 12b-1 fees of acquiring funds after a merger, relative to other funds 
that did not undergo a merger, controlling for observable fund characteristics and fixed effects. All reported estimates are significant 
at least at the 5% significance level. The symbol “−” indicates no statistically significant effect at the 5% level. The regressions for all 
funds are based on 115,146 fund-year observations from 18,429 unique funds. The sample includes 61,337 observations for pure 
equity funds (8,999 funds), 25,377 observations for pure bond funds (4,167 funds), and 28,432 observations for mixed funds (5,263 
funds). 

These results suggest that, unlike expense ratios and management fees, 12b-1 fees tend to remain 
unchanged after mergers. This means that the fee reductions observed in the raw data in Table 6 might be 
associated with differences in fund composition rather than a causal effect of the merger. 

The persistence of 12b-1 likely reflects the contractual and structural nature of distribution arrangements, 
which are less flexible than other operational costs. While mergers may improve efficiency in other areas, 
they appear to have limited influence on how funds pay for distribution and marketing. 



DIVISION OF ECONOMIC AND RISK ANALYSIS 15 

Summary and Conclusions 
This white paper provides a comprehensive look at post‑merger fee changes in acquiring funds. Using a 
dataset of 1,846 acquiring funds involved in mergers between 2011 and 2023, the analysis shows that fee 
changes associated with mergers vary widely depending on the type of fund and the structure of the 
merger. 

The results show that mergers are generally associated with lower expense ratios and management fees. 
The largest reductions are for mixed funds involved in cross-family mergers and for bond funds that 
undergo share class consolidations. These cost savings may reflect economies of scale or the elimination 
of overlapping operations. In contrast, 12b-1 fees, used to cover distribution and shareholder service 
expenses, remain largely unchanged, with only a small increase observed in bond funds. This suggests 
that while operational costs may fall after a merger, distribution agreements are more resistant to change. 

While the analysis shows that fee reductions occur in many cases, the magnitude and even the presence of 
these benefits vary by fund type and merger structure.   Lower fees do not necessarily translate into higher 
net returns, because other factors can offset these savings. For instance, one study finds that while 
expense ratios fall, fund gross returns may also decrease due to liquidity constraints and diminishing 
returns to scale.51 In addition, changes in investor-facing policies, such as short-term trading fees or 
round-trip restrictions imposed by some fund families to discourage rapid turnover, may also affect 
investor outcomes. These policies are not formal redemption restrictions but can influence investor 
behavior. Importantly, the experience of investors in acquiring and acquired funds may differ, making it 
difficult to generalize about aggregate investor benefits.   For fund managers, the results suggest that 
mergers, particularly those involving bond or mixed funds, may be associated with improved efficiency 
and lower fees. Equity funds, by contrast, appear less likely to benefit from cost reductions. 

It is also important to acknowledge the limitations of this analysis. Due to data limitations, the study 
cannot fully identify the mechanisms behind the observed fee reductions. While the savings likely result 
from a combination of operational efficiencies and scale advantages, the data do not allow us to determine 
which of these factors plays a larger role. Regardless of the exact mechanism, the data suggest that 
investors in acquiring funds often exhibit lower fees following certain types of mergers. While acquired 
funds are not observable after the merger, the lower average fees in the post-merger acquiring funds 
suggest that investors from acquired funds likely benefited as well (assuming they remained in the 
merged entity). Although this paper does not track absorbed funds directly, the fee reductions observed in 
acquiring funds provide indirect evidence of potential benefits for those investors. 

Additionally, the findings are based on U.S.  mutual funds and ETFs and may not generalize to other 
types of investment vehicles or to international markets. Finally, the statistical method used, DiD, relies 
on the assumption that mergers are not systematically driven by unobserved factors. The inclusion of fund 
fixed effects and control variables helps mitigate, but does not eliminate, this concern. In addition, the 
estimated effects reflect average changes in fees across all post-merger years, rather than isolating short-

51 McLemore (2019). 



DIVISION OF ECONOMIC AND RISK ANALYSIS 16 

term or long-term dynamics. As such, the analysis does not identify whether cost savings emerge 
immediately or gradually over time. 

Despite these caveats, the evidence presented here suggests that fund mergers are often associated with 
cost savings for investors, particularly in the form of lower expense ratios and management fees for 
certain types of funds. 

Future research could explore methods to estimate post-merger outcomes for acquired funds, such as 
aggregating the acquiring and acquired funds’ characteristics before the merger and comparing them to 
the consolidated entity afterward. However, this approach would require strong identifying assumptions. 
Most notably, that any observed change in fees is attributable solely to the merger itself, rather than to 
other structural or market-driven changes. 



DIVISION OF ECONOMIC AND RISK ANALYSIS 17 

Appendix A: Data and Sample Construction 

Data Sources and Coverage 
• Source: CRSP Mutual Fund Database 
• Time Period: 2010-2023 
• Mergers during 2011-2023 to allow for at least one year of pre-merger observations 
• Final Sample Size: Varies by dependent variable due to data availability 

Data Cleaning Procedures 

Expense Ratios 
• Format: Originally in decimal format 
• Cleaning: 

o Removed negative values 
o Winsorized at 1st and 99th percentiles 
o Converted to percentage points for interpretation 

Management Fees 
• Format: Already in percentage format per CRSP documentation 
• Economic Constraints Applied:   

o Negative values removed 
o Winsorized at 1st and 99th percentiles 

12b-1 Fees 
• Format: Decimal format requiring conversion 
• Regulatory Constraints:   

o Capped at 1% regulatory limit (For no-load funds, FINRA rules cap the fee at 0.25%.) 
o Cannot exceed expense ratios 
o Winsorized at 1st and 99th percentiles 

Sample Restrictions 
• Excluded ETNs and variable annuity funds 
• Required non-missing control variables for the period 2010-2023 
• Focused on mergers occurring 2011 and 2023 to allow at least one year of pre-merger 

observations for mergers completed in 2011 



DIVISION OF ECONOMIC AND RISK ANALYSIS 18 

Appendix B: Variable Construction 

Fund Classification Based on Holdings 
• Equity Funds:   ≥80% average equity holdings AND <10% fixed income 
• Bond Funds: ≥80% average fixed income holdings AND <10% equity 
• Mixed Funds: All funds not meeting equity or bond criteria 

Merger Variables 
• Within-Family Mergers: Same management company, different funds 
• Cross-Family Mergers: Different management companies 
• Share Class Consolidations: Same fund group, different share classes 



DIVISION OF ECONOMIC AND RISK ANALYSIS 19 

Appendix C: Econometric Model 

Model Specification 
The analysis uses a DiD framework with fund fixed effects to estimate fee changes associated with 
mergers. The identification strategy uses the staggered timing of mergers across funds, comparing 
acquiring funds before and after merger completion to a control group of non-acquiring funds. Acquired 
funds are excluded from the estimation sample due to the inability to observe their post-merger 
characteristics. 

The basic specification is: 

     

where: 

• 𝑌𝑌𝑖𝑖 𝑖𝑖 is the outcome variable for fund 𝐴𝐴 in year 𝐴𝐴 (for example, the expense ratio) 
• 𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝑖𝑖 𝑖𝑖 is an indicator equal to 1 for acquiring funds in the year of the acquisition and all 

years after that 
• 𝑋𝑋𝑖𝑖 𝑖𝑖 is a set of time-varying fund controls 
• 𝛼𝛼 𝑖𝑖 represents fund fixed effects 
• 𝛿𝛿𝑖𝑖 represents year fixed effects 
• 𝜀𝜀𝑖𝑖 𝑖𝑖 is the error term, which is assumed to be correlated within funds52 

The fund controls include total net assets, the portfolio turnover ratio, the age of the fund (in years), and 
the number of funds in the family (all in logs). These variables control for observable heterogeneity in 
cost structures and scale economies that may be correlated with fees. Total net assets proxy for economies 
of scale, as larger funds may spread fixed costs over a broader asset base and negotiate lower service fees 
(Chen et al., 2004).53 The turnover ratio captures trading intensity and portfolio rebalancing activity, 
which may correlate with transaction costs and active management expenses (Carhart, 1997).54 Fund age 
reflects potential reputation effects, legacy pricing, and survivorship dynamics (Elton et al., 1996).55 The 
number of funds in the family proxies for the scale of the fund complex, which may influence internal 
cross-subsidization, shared infrastructure, and bargaining power with intermediaries (Gaspar et al., 
2006).56 Including these controls helps reduce confounding factors when estimating fee changes 
associated with mergers.. 

52 For this reason, the analysis estimates standard errors and t-stats using clustering at the fund level. 
53 See supra note 29. 
54 Mark M. Carhart, On Persistence in Mutual Fund Performance, 52 J. Fin. 57, 57–82 (1997). https://doi.org/10.1111/j.1540-
6261.1997.tb03808.x. 
55 Edwin J. Elton, Martin J. Gruber & Christopher R. Blake, The Persistence of Risk-Adjusted Mutual Fund Performance, 69 J. 
Bus. 133, 133–57 (1996), https://www.jstor.org/stable/2353461. 
56 José-Miguel Gaspar, Massimo Massa & Pedro Matos, Favoritism in Mutual Fund Families? Evidence on Strategic Cross-Fund 
Subsidization, 61 J. Fin. 73, 73–104 (2006), https://doi.org/10.1111/j.1540-6261.2006.00831.x. 

https://doi.org/10.1111/j.1540-6261.2006.00831.x
https://www.jstor.org/stable/2353461
https://doi.org/10.1111/j.1540


DIVISION OF ECONOMIC AND RISK ANALYSIS 20 

To examine heterogeneous effects by merger type, the analysis also estimates a disaggregated 
specification: 

     

where Post_Cross𝑖𝑖 𝑖𝑖 , Post_Within𝑖𝑖 𝑖𝑖 , and Post_Share𝑖𝑖 𝑖𝑖 are interactions between merger type indicators 
(cross-family, within family, and cross-share class) and the post-merger period (𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝑖𝑖 𝑖𝑖 ). 

The estimated post-merger effects reflect average changes in fees across all years following the merger. 
The model does not separately estimate short-term versus long-term dynamics. As such, if cost savings 
from mergers emerge gradually due to integration costs or operational frictions, the current specification 
would capture the average effect over that adjustment period. Future work could explore dynamic 
treatment effects to better understand the timing of fee changes. 

Parallel Trends Test 
The validity of the DiD approach relies on the parallel trends assumption—that acquiring and non-
acquiring funds would have followed similar trajectories in the absence of mergers. This paper tests this 
assumption by examining the significance of a linear pre-treatment trend (Pre_Trend𝑖𝑖 𝑖𝑖 ): 

  

where Pre_Trend𝑖𝑖 𝑖𝑖 = 𝑇𝑇 𝑇𝑇𝑇𝑇𝑇𝑇 𝐴𝐴𝑇𝑇𝑇𝑇𝑖𝑖 × 𝑇𝑇 𝐴𝐴𝑇𝑇𝑇𝑇 𝐴𝐴𝐴𝐴 𝑀𝑀𝑇𝑇𝑇𝑇𝑀𝑀𝑇𝑇𝑇𝑇𝑖𝑖 𝑖𝑖 

• 𝑇𝑇 𝑇𝑇𝑇𝑇𝑇𝑇 𝐴𝐴𝑇𝑇𝑇𝑇𝑖𝑖 = 1 if fund i acquired a fund at any year during 2011-2023 
• 𝑇𝑇 𝐴𝐴𝑇𝑇𝑇𝑇 𝐴𝐴𝐴𝐴 𝑀𝑀𝑇𝑇𝑇𝑇𝑀𝑀𝑇𝑇𝑇𝑇𝑖𝑖 𝑖𝑖 = Number of years until acquisition 

A significant 𝜃𝜃1 would indicate violation of the parallel trends assumption.DIVISION OF ECONOMIC AND RISK ANALYSIS 21 

Appendix D: Detailed Econometric Results 

Expense Ratios 

Table D1. Fee Changes Following Fund Mergers: Expense Ratio (Percentage Points) 

All Funds Equity Bond Mixed 

Acquisition -0.0177*** -0.0127** -0.0182*** -0.0285*** 
(0.0040) (0.0051) (0.0067) (0.0106) 

Total Net Assets -0.0087*** -0.0095*** -0.0048*** -0.0050*** 
(0.0004) (0.0005) (0.0008) (0.0012) 

Turnover Ratio 0.0234*** 0.0322*** 0.0123** 0.0162*** 
(0.0023) (0.0033) (0.0048) (0.0037) 

Age (Years) 0.0100*** 0.0127*** -0.0006 -0.0006 
(0.0015) (0.0019) (0.0024) (0.0042) 

Family Size -0.0018** 0.0023** -0.0010 -0.0095*** 
(0.0008) (0.0010) (0.0012) (0.0023) 

Observations 238,483 132,808 51,401 54,274 

Number of Funds 39,598 20,202 8,771 10,625 

R-squared 0.090 0.162 0.070 0.016 

Dependent variable: Expense ratio in percentage points. Fixed effects regressions with standard errors clustered by 
fund. Year dummy variables included but not reported. Controls include log total net assets, log turnover ratio, log 
fund age (in years), and log fund family size (number of funds in the family). Standard errors in parentheses. ** 
p<0.05, *** p<0.01. 



DIVISION OF ECONOMIC AND RISK ANALYSIS 22 

Table D2. Fee Changes Following Fund Mergers: Expense Ratio by Merger Type (Percentage Points) 

All Funds Equity Bond Mixed 

Cross-Family -0.0226*** -0.0143** -0.0150** -0.0461*** 
(0.0048) (0.0060) (0.0075) (0.0129) 

Within-Family -0.0079 -0.0086 -0.0135** 0.0077 
(0.0042) (0.0056) (0.0059) (0.0082) 

Share Class -0.0226*** -0.0206 -0.0503*** -0.0164 
(0.0073) (0.0112) (0.0150) (0.0130) 

Total Net Assets -0.0087*** -0.0095*** -0.0048*** -0.0050*** 
(0.0004) (0.0005) (0.0008) (0.0012) 

Turnover Ratio 0.0233*** 0.0322*** 0.0124*** 0.0161*** 
(0.0023) (0.0033) (0.0048) (0.0037) 

Age (Years) 0.0099*** 0.0126*** -0.0005 -0.0008 
(0.0015) (0.0019) (0.0024) (0.0042) 

Family Size -0.0019** 0.0023** -0.0010 -0.0098*** 
(0.0008) (0.0010) (0.0012) (0.0023) 

Observations 238,483 132,808 51,401 54,274 

Number of Funds 39,598 20,202 8,771 10,625 

R-squared 0.090 0.162 0.070 0.017 

Dependent variable: Expense ratio in percentage points. Fixed effects regressions with standard errors clustered by 
fund. Year dummy variables included but not reported. Controls include log total net assets, log turnover ratio, log 
fund age (in years), and log fund family size (number of funds in the family). Standard errors in parentheses. ** 
p<0.05, *** p<0.01.   



DIVISION OF ECONOMIC AND RISK ANALYSIS 23 

Management Fees 

Table D3. Fee Changes Following Fund Mergers: Management Fees (Percentage Points) 

All Funds Equity Bond Mixed 

Acquisition -0.0112*** 0.0007 -0.0141** -0.0449*** 
(0.0038) (0.0047) (0.0063) (0.0105) 

Total Net Assets 0.0161*** 0.0156*** 0.0120*** 0.0237*** 
(0.0005) (0.0007) (0.0008) (0.0014) 

Turnover Ratio -0.0013 -0.0072* -0.0104*** 0.0058 
(0.0024) (0.0038) (0.0037) (0.0044) 

Age (Years) 0.0149*** 0.0147*** 0.0121*** 0.0111** 
(0.0017) (0.0023) (0.0027) (0.0045) 

Family Size 0.0051*** 0.0069*** 0.0007 0.0065*** 
(0.0009) (0.0012) (0.0015) (0.0024) 

Observations 205,355 116,150 46,553 42,652 

Number of Funds 33,812 17,542 7,979 8,291 

R-squared 0.057 0.064 0.093 0.047 

Dependent variable: Management fees in percentage points. Fixed effects regressions with standard errors 
clustered by fund. Year dummy variables included but not reported. Controls include log total net assets, log 
turnover ratio, log fund age (in years), and log fund family size (number of funds in the family). Standard errors in 
parentheses. ** p<0.05, *** p<0.01. 



DIVISION OF ECONOMIC AND RISK ANALYSIS 24 

Table D4. Fee Changes Following Fund Mergers: Management Fees by Merger Type (Percentage 
Points) 

All Funds Equity Bond Mixed 

Cross-Family -0.0115** 0.0028 -0.0086 -0.0572*** 
(0.0045) (0.0055) (0.0069) (0.0130) 

Within-Family -0.0079 0.0015 -0.0162** -0.0262*** 
(0.0041) (0.0054) (0.0063) (0.0085) 

Share Class -0.0212*** -0.0197 -0.0369** -0.0285** 
(0.0079) (0.0131) (0.0150) (0.0126) 

Total Net Assets 0.0161*** 0.0156*** 0.0120*** 0.0238*** 
(0.0005) (0.0007) (0.0008) (0.0014) 

Turnover Ratio -0.0013 -0.0072 -0.0103*** 0.0057 
(0.0024) (0.0038) (0.0037) (0.0044) 

Age (Years) 0.0149*** 0.0147*** 0.0122*** 0.0110** 
(0.0017) (0.0023) (0.0027) (0.0046) 

Family Size 0.0051*** 0.0070*** 0.0007 0.0062*** 
(0.0009) (0.0012) (0.0015) (0.0024) 

Observations 205,355 116,150 46,553 42,652 

Number of Funds 33,812 17,542 7,979 8,291 

R-squared 0.057 0.064 0.093 0.047 

Dependent variable: Management fees in percentage points. Fixed effects regressions with standard errors clustered 
by fund. Year dummy variables included but not reported. Controls include log total net assets, log turnover ratio, log 
fund age (in years), and log fund family size (number of funds in the family). Standard errors in parentheses. ** 
p<0.05, *** p<0.01.   



DIVISION OF ECONOMIC AND RISK ANALYSIS 25 

12b-1 Fees 

Table D5. Fee Changes Following Fund Mergers: 12b-1 Fees (Percentage Points) 

All Funds Equity Bond Mixed 

Acquisition 0.0000 -0.0019 0.0036** 0.0006 
(0.0014) (0.0019) (0.0015) (0.0038) 

Total Net Assets 0.0013*** 0.0013*** 0.0013*** 0.0014*** 
(0.0002) (0.0003) (0.0004) (0.0005) 

Turnover Ratio -0.0003 0.0008 -0.0013 -0.0012 
(0.0008) (0.0015) (0.0014) (0.0011) 

Age (Years) 0.0028*** 0.0040*** 0.0015 0.0014 
(0.0008) (0.0012) (0.0013) (0.0016) 

Family Size -0.0012*** -0.0016*** -0.0009 -0.0006 
(0.0004) (0.0005) (0.0008) (0.0006) 

Observations 115,146 61,337 25,377 28,432 

Number of Funds 18,429 8,999 4,167 5,263 

R-squared 0.009 0.010 0.009 0.008 

Dependent variable: 12b-1 fees in percentage points. Fixed effects regressions with standard errors clustered by 
fund. Year dummy variables included but not reported. Controls include log total net assets, log turnover ratio, log 
fund age (in years), and log fund family size (number of funds in the family). Standard errors in parentheses. ** 
p<0.05, *** p<0.01. 



DIVISION OF ECONOMIC AND RISK ANALYSIS 26 

Table D6. Fee Changes Following Fund Mergers: 12b-1 Fees by Merger Type (Percentage Points) 

All Funds Equity Bond Mixed 

Cross-Family -0.0005 -0.0024 0.0044*** -0.0010 
(0.0019) (0.0025) (0.0017) (0.0054) 

Within-Family 0.0002 -0.0018 0.0028 0.0023 
(0.0015) (0.0020) (0.0029) (0.0026) 

Share Class 0.0013 -0.0011 0.0016 0.0030 
(0.0012) (0.0013) (0.0013) (0.0028) 

Total Net Assets 0.0013*** 0.0013*** 0.0013*** 0.0014*** 
(0.0002) (0.0003) (0.0004) (0.0005) 

Turnover Ratio -0.0003 0.0008 -0.0013 -0.0012 
(0.0008) (0.0015) (0.0014) (0.0011) 

Age (Years) 0.0028*** 0.0040*** 0.0015 0.0013 
(0.0008) (0.0012) (0.0013) (0.0016) 

Family Size -0.0012*** -0.0016*** -0.0009 -0.0007 
(0.0004) (0.0005) (0.0008) (0.0006) 

Observations 115,146 61,337 25,377 28,432 

Number of Funds 18,429 8,999 4,167 5,263 

R-squared 0.009 0.010 0.009 0.008 

Dependent variable: 12b-1 fees in percentage points. Fixed effects regressions with standard errors clustered by 
fund. Year dummy variables included but not reported. Controls include log total net assets, log turnover ratio, log 
fund age (in years), and log fund family size (number of funds in the family). Standard errors in parentheses. ** 
p<0.05, *** p<0.01.   



DIVISION OF ECONOMIC AND RISK ANALYSIS 27 

Table D7. Test of Parallel Linear Trends for All Fees 

Expense Ratio Management Fee 12b-1 Fee 

Trend -0.0020 -0.0002 -0.0003 
(0.0012) (0.0010) (0.0003) 

Observations 230,140 197,430 110,133 

R-squared 0.086 0.056 0.009 

Dependent variable: Fees in percentage points. Fixed effects regressions with standard errors clustered by fund. 
Year dummy variables included but not reported. Controls include log total net assets, log turnover ratio, log fund 
age (in years), and log fund family size (number of funds in the family). The trend variable is the interaction between 
the treatment group indicator (acquisition) and a variable measuring the number of years prior to the treatment 
implementation. It measures the difference in trends between treated and control funds in the pre-treatment period. 
The control funds serve as the baseline group against which the pre-treatment trajectory of treated funds is 
compared. Standard errors in parentheses. ** p<0.05, *** p<0.01.

DIVISION OF ECONOMIC AND RISK ANALYSIS 1 

When Funds Merge: What Happens 
to Fees? Evidence from Acquiring 
Mutual Funds and ETFs 
Ricardo A. Lopez Rago1 

_____________________________________________________________________________________ 

FEBRUARY 2026 

Abstract 
This white paper explores how mergers of mutual funds and exchange-traded funds (ETFs) are associated 
with changes in the fees paid by investors in funds that acquired another fund through a merger 
(acquiring funds), specifically expense ratios, management fees, and 12b-1 fees. The analysis uses data 
from 2010 to 2023 and focuses on over 1,800 U.S. mutual fund mergers that occurred between 2011 and 
2023, allowing for at least one year of pre-merger observations. The results suggest that mergers are 
generally associated with lower fees for investors in acquiring funds, and the size and type of those 
savings vary by fund type and the structure of the merger. Because acquired funds are absorbed and no 
longer report separately, the analysis does not estimate post-merger fee effects for those funds. 

1 This white paper is provided in the author’s official capacity as an economist in the Commission’s Division of Economic and Risk 
Analysis but does not necessarily reflect the views of the Commission, the Commissioners, or other members of the staff. The 
author thanks Joshua White, Oliver Richard, Alex Schiller, Samantha Croffie, Charles M. Woodworth, the Division of Investment 
Management and the Office of the General Counsel for helpful comments and suggestions. 



DIVISION OF ECONOMIC AND RISK ANALYSIS 2 

Introduction 
The mutual fund and ETF industry is one of the largest investment markets in the U.S., managing over 
$32.7 trillion in assets as of December 2024.2 By 2030, that number is expected to grow to nearly $39 
trillion.3 Today, nearly 130 million Americans (about 40% of the population) own mutual funds, ETFs, or 
other registered investment companies.4 

This white paper examines how fund mergers are associated with changes in the fees paid by investors in 
acquiring funds, specifically expense ratios, management fees, and 12b-1 fees. Using public data from 
2010 to 2023, it analyzes over 1,800 mergers between 2011 and 2023 and breaks them down by fund type 
(equity, bond, or mixed) and merger type (within the same fund family, across fund families, or between 
share classes).   

Mergers can lead to lower fees by exploiting economies of scale and streamlining operations.5 But they 
could also reduce competition, which might result in higher fees. Prior studies have examined fee changes 
following fund mergers, generally finding that expense ratios decline, though the timing and magnitude 
vary.6 This paper extends that work by analyzing more recent data and a broader dataset. 

Importantly, this paper focuses only on fees, expense ratios, management fees, and 12b-1 fees, not on 
overall investor returns. While lower fees may benefit investors, they do not necessarily guarantee higher 
net returns, as performance can be affected by factors such as decreasing returns to scale or post-merger 
inefficiencies. The analysis below suggests that many mergers are associated with lower fees for investors 
in acquiring funds, and the size and nature of those associations vary by fund type and the structure of the 
merger. Bond and mixed funds tend to see the largest fee reductions, while equity funds show reductions 
primarily in cross-family mergers. 

2 See U.S. Sec. & Exch. Comm’n, Div. of Inv. Mgmt., Registered Fund Statistics: Form N-PORT Data, Period Ending December 
2024 (May 8, 2025), tbl. 2.3, https://www.sec.gov/files/investment/im-investment-registered-fund-statistics-20250508.pdf. 
3 PwC estimates that the size of the U.S. mutual fund industry will reach $38 trillion in 2030, while Mordor Intelligence projects this 
number to reach $39.22 trillion in 2023. See PricewaterhouseCoopers, Mutual Funds 2030: Rising Expectations and 
Response (2023), https://www.pwc.com/us/en/industries/financial-services/library/pwc-2030-mutual-fund-outlook.pdf; Mordor 
Intelligence, U.S. Mutual Fund Industry Size & Share Analysis – Growth Trends & Forecasts (2025– 
2030) (2025), https://www.mordorintelligence.com/industry-reports/us-mutual-funds-industry.   
4 These numbers include open-end mutual funds, ETFs, traditional closed-end funds, and unit investment trusts. See Inv. Co. 
Inst., 2024 Investment Company Fact Book: A Review of Trends and Activities in the Investment Company 
Industry (2024), https://www.ici.org/system/files/2024-05/2024-factbook.pdf.   
5 Joseph Chen et al., Does Fund Size Erode Mutual Fund Performance? The Role of Liquidity and Organization, 94 Am. Econ. 
Rev. 1276, 1276–1302 (2004), https://www.jstor.org/stable/3592823.   
6 See Narayanan Jayaraman, Ajay Khorana & Edward Nelling, An Analysis of the Determinants and Shareholder Wealth Effects of 
Mutual Fund Mergers, 57 J. Fin. 1521, 1521–61 (2002), https://www.jstor.org/stable/2697786; and Patrick McLemore, Do Mutual 
Funds Have Decreasing Returns to Scale? Evidence from Fund Mergers, 54 J. Fin. & Quantitative Analysis 1683, 1683–1711 
(2019), https://doi.org/10.1017/S0022109018001023. 

https://doi.org/10.1017/S0022109018001023
https://www.jstor.org/stable/2697786
https://www.jstor.org/stable/3592823
https://www.ici.org/system/files/2024-05/2024-factbook.pdf
https://www.mordorintelligence.com/industry-reports/us-mutual-funds-industry
https://www.pwc.com/us/en/industries/financial-services/library/pwc-2030-mutual-fund-outlook.pdf
https://www.sec.gov/files/investment/im-investment-registered-fund-statistics-20250508.pdf


DIVISION OF ECONOMIC AND RISK ANALYSIS 3 

Data and Sample Construction 
This white paper uses data from the Center for Research in Security Prices (CRSP) Survivor-Bias-Free 
U.S. Mutual Fund Database (updated in May 2025),7 which provides detailed information on fund 
characteristics, performance, and organizational changes.8 The analysis uses data from 2010 to 2023 and 
includes mergers from 2011 to 2023 to ensure at least one year of pre-merger data is available for each 
case.9 The CRSP Survivor-Bias-Free U.S. Mutual Fund Database includes both active and inactive funds, 
preserving historical data on funds that were liquidated or merged.10 This approach helps eliminate 
survivorship bias by ensuring that poorly performing or high-fee funds that exited the market are still 
represented in the data prior to becoming inactive. As a result, the analysis reflects the full distribution of 
fund outcomes over time, rather than only those of surviving funds.11 

The analysis focuses on acquiring mutual funds and exchange traded funds.12 It removes any records with 
clearly erroneous values, such as negative expense ratios or invalid portfolio allocation percentages.13 

These steps help produce a clean and consistent set of traditional mutual funds and ETFs.14   

To identify mergers, this white paper tracks funds that became inactive and uses unique identifiers from 
the CRSP dataset to link them to the acquiring fund. To avoid confusion from overlapping events, the 
analysis includes only acquiring funds that completed a single merger during the sample period. While 
this restriction reduces the sample size, it helps focus on fee changes associated with a single merger and 
provides a more conservative, but cleaner, estimate of its impact.15 Acquired funds are excluded from the 
regression analysis,16 as are acquiring funds involved in multiple mergers. Similar funds that did not 
acquire another fund (non-acquiring funds) serve as the control group. This design helps approximate the 
effect of mergers on acquiring fund fees, though it does not capture the experience of acquired funds or 
the aggregate investor impact of mergers. While acquired funds cannot be tracked post-merger due to data 

7 Center for Research in Sec. Prices (CRSP), Survivor-Bias-Free US Mutual Fund Database, available at 
https://www.crsp.org/research/crsp-survivor-bias-free-us-mutual-funds/ (2025). 
8 For purposes of this paper, ‘fund’ refers to U.S. registered mutual funds and exchange-traded funds (ETFs). The CRSP Survivor-
Bias-Free U.S. Mutual Fund Database includes both mutual funds and ETFs as well as other products such as exchange-traded 
notes (ETNs) and variable annuities. 
9 Although the May 2025 version of the CRSP database includes preliminary data for 2024, an examination of that data revealed it to 
be incomplete and not yet finalized. For this reason, 2024 data was excluded from the analysis to ensure accuracy and consistency. 
10 Center for Research in Sec. Prices (CRSP), Survivor-Bias-Free US Mutual Fund Database, available at 
https://www.crsp.org/research/crsp-survivor-bias-free-us-mutual-funds/ (2025). 
11 Id.   
12 In other words, the analysis excludes exchange-traded notes (ETNs) and variable annuities, which operate under different rules 
and fee structures than mutual funds and ETFs. 
13 Invalid portfolio allocation percentages refer to any allocation variable (e.g., percent in stocks, bonds, cash) that is less than zero. 
14 See Appendix A for more details on the data cleaning process.   
15 This restriction is conservative because it avoids potential bias from funds that engage in multiple mergers, which may be 
systematically different, such as being larger, more complex, or more aggressive in fee restructuring. By focusing only on single-
merger events, the analysis reduces the risk of overstating the average fee impact and helps ensure that the estimated effect is not 
driven by unusually active acquiring funds. 
16 Because acquired funds are absorbed and no longer report separately post-merger, their fee trajectories cannot be tracked and 
are excluded from the analysis. 

https://www.crsp.org/research/crsp-survivor-bias-free-us-mutual-funds
https://www.crsp.org/research/crsp-survivor-bias-free-us-mutual-funds


DIVISION OF ECONOMIC AND RISK ANALYSIS 4 

limitations, future research could explore indirect methods, such as aggregating pre-merger characteristics 
of both funds, to estimate post-merger outcomes.    

The analysis groups mergers into three categories based on the relationship between the acquiring and 
acquired funds.17 “Within-family” mergers involve funds from the same fund family or fund complex and 
do not involve the consolidation of different share classes of the same fund. “Cross-family” mergers 
involve funds from different fund families. “Share class” consolidations represent the combination of 
different share classes within the same fund. The analysis does not explicitly adjust for fund conversions 
or the introduction of new share classes over time. While the CRSP dataset includes share class 
identifiers, distinguishing between organic share class creation and structural changes such as conversions 
or reclassifications is not always straightforward. Future work could explore this dimension more 
systematically.18 

Figure 1 shows the number of mergers by type between 2011 and 2023. Within-family mergers are the 
most common, accounting for 65.3% of single-merger events, followed by cross-family mergers at 19.2% 
and share-class consolidations at 15.5%.   

Figure 1. Number of Mergers by Type (2011-2023) 

Author’s calculations using data from the CRSP Mutual Fund Database. 
Note: Numbers reflect single merger events; repeat acquisitions by the 
same fund during the period are not included. 

17 See Appendix B for more details on variable constructions, including the different merger variables discussed in this white paper. 
18 This analysis does not examine the impact of hybrid structures that combine mutual fund and ETF share classes, such as those 
historically used by Vanguard. While these structures were rare during the review period, they may influence fee dynamics and 
represent an interesting area for future research. 



DIVISION OF ECONOMIC AND RISK ANALYSIS 5 

Figure 2 shows the number of fund mergers per year over the period 2011–2023. The annual average was 
approximately 142 mergers, with some variation across years. These numbers reflect single merger events 
and do not represent the total number of mergers in the mutual fund industry, as they exclude cases where 
a fund merged more than once during the period. 

Figure 2. Number of Mergers by Year (2011-2023) 

Author’s calculations using data from the CRSP Mutual Fund Database. 
Note: Numbers reflect single merger events; repeat acquisitions by the 
same fund during the period are not included. 

This paper also classifies funds by investment style. “Equity” funds hold mostly stocks,19 “bond” funds 
hold mostly fixed income assets,20 and “mixed” funds hold a combination of both.21 This classification 
allows the analysis to examine whether different types of funds experience different changes in fees after 
a merger. Table 1 presents the distribution of mergers across fund types and merger types.22 

19 Equity funds are defined as those that, on average over 2010–2023, hold at least 80% of assets in equities and less than 10% in 
fixed income. The 80% threshold aligns with the SEC Names Rule, while the <10% limit ensures clear separation from mixed funds. 
20 Bond funds are defined as those that, on average over 2010–2023, hold at least 80% of assets in fixed income (consistent with 
the SEC Names Rule) and less than 10% in equities to ensure clear separation from mixed funds. 
21 Mixed funds are defined as those that, on average over 2010–2023, do not meet the criteria for equity or bond funds—that is, they 
hold less than 80% in equities and less than 80% in fixed income. This category captures funds with more balanced or diversified 
allocations. 
22 The distribution of mergers by fund and merger type remained relatively stable for most categories. The share of pure equity funds 
declined from 56.8% in 2011–2016 to 49.0% in 2017–2023, while pure bond funds increased from 16.6% to 20.0%, and mixed funds 
from 26.5% to 30.9%. Share class consolidations rose from 12.2% to 19.1%. In contrast, cross-family mergers increased from 9.6% 
to 29.8%, and within-family mergers declined from 78.0% to 49.0%. 



DIVISION OF ECONOMIC AND RISK ANALYSIS 6 

Table 1. Distribution of Mergers by Fund Type and Merger Type 

Equity a Bond b Mixed c Total 

Within-Family d 687 192 326 1,205 

Cross-Family e 180 59 116 355 

Share Class f 113 85 88 286 

Total 980 336 530 1,846 

a ≥80% average equity holdings and <10% fixed income over the period 2010-2023 
b ≥80% average fixed income holdings and <10% equity over the period 2010-2023 
c Funds not meeting equity or bond criteria 
d Same fund family, different funds 
e Different fund families 
f Same fund, different share classes 

To estimate fee changes associated with mergers, this analysis uses a statistical method called difference-
in-differences (DiD). This approach compares fees over time for acquiring funds to fees over time for 
non-acquiring funds. The goal is to distinguish fee changes associated with mergers from broader market 
trends or differences between funds. 

For example, simply comparing a fund’s fees before and after a merger could be misleading if fees were 
already trending downward across the industry. The DiD approach used in this analysis addresses this by 
using a control group of non-acquiring funds that serve as a benchmark. If both acquiring and non-
acquiring funds were on similar paths before the merger, any difference in their fee trends post-merger 
can be more plausibly linked to the merger. The empirical analysis employs fund-type-specific control 
groups, where treated funds are compared only to control funds of the same type: equity funds that 
undergo mergers are compared to non-acquiring equity funds, bond funds to non-acquiring bond funds, 
and mixed funds to non-acquiring mixed funds. This fund-type matching aims to improve comparability 
between treatment and control groups with respect to fundamental investment characteristics and 
regulatory constraints.23 

23 Within each fund type, the analysis does not further subdivide control groups by merger type (within-family, cross-family, and 
share class mergers). This decision reflects both economic and statistical considerations. From an economic perspective, there is 
no clear theoretical basis for why specific subsets of non-acquiring funds within a given fund type would provide more appropriate 
counterfactuals for different merger types. Unlike fund classifications based on objective portfolio holdings, merger type categories 
do not reflect inherent characteristics that would make certain non-acquiring funds more suitable controls. For instance, non-
acquiring equity funds in unrelated families are not necessarily more comparable to cross-family equity merger participants than 
non-acquiring equity funds within the same family. From a statistical standpoint, subdividing control groups by both fund type and 
merger type would substantially reduce sample sizes, potentially leading to underpowered tests and imprecise estimates, 
particularly for less common combinations such as cross-family bond fund mergers. The current approach maximizes statistical 
power within each fund type while allowing merger effects to vary through interaction terms, providing robust estimates of differential 
impacts across merger types without imposing potentially arbitrary restrictions on control group composition beyond the 
economically meaningful fund-type matching. Regarding sectoral or geographic differences, these are often nested within fund type 
classifications and are not consistently disclosed across funds. By matching on fund type, the analysis already mitigates much of the 
heterogeneity in these dimensions. Future work could explore more granular market definitions where data availability permits. 



DIVISION OF ECONOMIC AND RISK ANALYSIS 7 

The analysis includes fund fixed effects, which control for any unchanging characteristics of each fund, 
such as its investment strategy, management style, or brand reputation.24 The model also includes year 
fixed effects, which account for broader industry-wide changes that affect all funds in a given year, such 
as regulatory shifts, market conditions, or technological improvements. 

A key assumption behind the DiD approach is the “parallel trends assumption.” It means that, in the 
absence of a merger, the fees of acquiring funds would have followed the same general trend as those of 
non-acquiring funds. If this assumption holds, then any divergence in trends after the merger can be 
interpreted as consistent with an effect of mergers, though caution is warranted.25 The analysis tests this 
assumption by examining whether the two groups had similar fee trajectories before the merger, and the 
results support its validity (see Appendix D, Table D7 for estimation results).26   

This combination of fund fixed effects, year fixed effects, and a carefully selected control group makes 
the DiD approach especially well-suited for assessing fee changes around mergers in a complex and 
evolving market. Because acquisition decisions may reflect unobservable factors, the estimates should be 
interpreted as associations rather than definitive causal effects. 

Fee Changes Following Fund Mergers 

Expense Ratios 
Expense ratios represent the annual fees that mutual funds charge to cover their operating costs, expressed 
as a percentage of assets under management (AUM). These costs include management fees, 12b-1 fees, 
certain shareholder service expenses, custodial expenses, legal expenses, accounting expenses, transfer 
agent expenses, and other administrative expenses.27 

These fees directly reduce investor returns. For example, a fund with a 1% expense ratio charges $10 
annually for every $1,000 invested. That means that if the fund earns a 7% gross return, the investor 
receives a 6% net return. Over time, even small differences in expense ratios can significantly affect long-
term wealth accumulation due to compounding.28 

24 Fund fixed effects are likely to be effective in capturing investment strategy because the treated group in the estimation sample 
consists only of acquiring funds, which are classified based on their long-term average portfolio holdings (e.g., ≥80% equity). This 
helps ensure that each fund’s core investment style remains stable over time. Moreover, treated funds are compared only to non-
acquiring control funds of the same type (equity, bond, or mixed), which minimizes differences in investment strategy between 
groups. While some mergers may induce changes in strategy, particularly when the acquired fund has a different asset mix, these 
cases are likely limited given the exclusion of acquired funds and the fund-type-specific design. Nonetheless, potential post-merger 
strategy drift remains a limitation and a direction for future research. 
25 See, e.g., Joshua D. Angrist & Jörn-Steffen Pischke, Mostly Harmless Econometrics: An Empiricist’s Companion (Princeton Univ. 
Press 2009). 
26 See Appendix C for more details on this test and the models. 
27 See U.S. Sec. & Exch. Comm’n, Mutual Fund and ETF Fees and Expenses – Investor Bulletin, 
Investor.gov, https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/mutual-
fund-and-etf-fees-and-expenses-investor-bulletin (July 23, 2025).   
28 See U.S. Sec. & Exch. Comm’n, Office of Inv. Educ. & Advocacy, How Fees and Expenses Affect Your Investment Portfolio, SEC 
Investor Bulletin, SEC Pub. No. 164 (Feb. 2014), https://www.sec.gov/investor/alerts/ib_fees_expenses.pdf.   

https://www.sec.gov/investor/alerts/ib_fees_expenses.pdf
https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/mutual
https://Investor.gov


DIVISION OF ECONOMIC AND RISK ANALYSIS 8 

In theory, mergers can reduce, increase, or leave the expense ratios of acquiring funds unchanged. For 
example, mergers may lower costs by increasing fund size and allowing the combined fund to benefit 
from economies of scale. Larger funds can spread fixed costs over a broader asset base,29 and eliminate 
redundant operations.30 In contrast, mergers may reduce competition in the market, potentially weakening 
the pressure to keep fees low.31 

Previous research suggests that fund mergers are associated with reductions in expense ratios. However, 
these studies do not employ a DiD design, leaving open the possibility that selection and pre-existing 
trends contribute to the observed fee declines.32 This paper builds on that literature by using a larger and 
more recent dataset (2011–2023), applying a DiD approach, and exploring heterogeneity by fund type and 
merger structure, providing new evidence on which mergers are associated with the greatest fee 
reductions. 

Table 2 shows unweighted mean expense ratios for acquiring and acquired mutual funds involved in 
mergers between 2011 and 2023. The table organizes the data by fund type and merger timing. While 
these summary statistics do not establish causal relationships, they provide a descriptive view of fee levels 
before and after mergers. On average, acquired funds had higher expense ratios prior to the merger than 
the acquiring funds.33 Although acquired funds are not observed after the merger (they are absorbed into 
the acquiring fund) the fact that post-merger acquiring funds (i.e., the consolidated funds) have lower 
expense ratios than pre-merger acquired funds suggests that investors in the acquired funds may have 
experienced lower fees,34 assuming they remained invested in the merged structure. This pattern is 
consistent across all fund types, with the largest differences observed in equity and mixed funds. 

Acquiring funds also experienced a modest decline in expense ratios following a merger. As shown in 
Table 2, the average expense ratio for acquiring funds decreased from 1.11% before a merger to 1.06% 
afterward. This downward trend is evident across all fund types, with the most notable reduction observed 
in mixed funds (from 1.00% to 0.89%). These changes may reflect cost efficiencies realized through 
consolidation or strategic fee adjustments to enhance competitiveness. From an expense standpoint, the 

29 There is empirical evidence documenting that larger funds tend to have lower expense ratios suggesting that funds may be able to 
enjoy the benefits of economies of scale. See, e.g., Chen et al. (2004). See supra note 5. 
30 It is possible, however, that the fund might use the cost savings to increase marketing efforts instead of passing the savings on to 
investors in the form of lower expense ratios. See Jayaraman, et al. (2002). See supra note 6. 
31 This concern is supported by Ordover, Sykes, and Willig (1982), who argue that mergers can increase market power not only by 
raising concentration, as measured by the Herfindahl-Hirschman Index (HHI), but also by reducing interfirm rivalry. They argue that 
changes in HHI can be informative about the effects of mergers, but only when interpreted alongside other evidence such as 
demand elasticity, the presence of a competitive fringe, and the nature of firm interactions. While this paper focuses on fund-level 
outcomes, future research could explore how changes in investor cost proxies (e.g., expense ratios, management fees) relate to 
changes in market concentration following mergers. See Janusz A. Ordover, Alan O. Sykes & Robert D. Willig, Herfindahl 
Concentration, Rivalry, and Mergers, 95 Harv. L. Rev. 1857, 1857–74 (1982), https://doi.org/10.2307/1340652. 
32 Jayaraman, et al. (2002), see supra note 6, find that expense ratios decline following mergers, but the effect becomes statistically 
significant only two years after the merger. Their study uses a sample of 742 mutual fund mergers between 1994 and 1997 and 
finds that poor past performance and high expense ratios are key drivers of within-family mergers. McLemore (2019), see supra 
note 6, analyzes mutual fund mergers from 2000 to 2014 and finds that acquiring funds experience a decline in expense ratios both 
before and after the merger. The study attributes the decline to economies of scale and liquidity constraints. 
33 All differences are statistically significant at the 1% level based on two-sample t-tests using unweighted means. 
34 All differences are statistically significant at the 1% level based on two-sample t-tests using unweighted means. 

https://doi.org/10.2307/1340652


DIVISION OF ECONOMIC AND RISK ANALYSIS 9 

data suggest that mergers may benefit not only investors from acquired funds but also those already 
invested in the acquiring funds. 

Table 2. Summary Statistics for Acquired and Acquiring Funds: Expense Ratios (Unweighted Means, 
Percentage) 

Acquired Before Acquiring Before Acquiring After 

All 1.28 1.11 1.06 

Equity 1.40 1.23 1.17 

Bond 1.15 0.88 0.87 

Mix 1.15 1.00 0.89 

Numbers represent unweighted mean fee levels (in percentage) for mutual funds involved in mergers between 2011 and 2023. 
Acquired Before: Acquired funds in the pre-merger period. Acquiring Before: Acquiring funds in the pre-merger period. Acquiring 
After: Acquiring funds in the post-merger period. All differences in mean expense ratios between acquired funds (pre-merger) and 
acquiring funds (both pre- and post-merger) are statistically significant at the 1% level based on two-sample t-tests using 
unweighted means. 

Table 3 presents the estimated effect of mergers on expense ratios in acquiring funds. On average, 
mergers reduce expense ratios by 0.0177 pp, or 1.77 basis points (bps).35 For example, a fund with a 
1.00% expense ratio would see it fall to 0.9823% after a merger. The largest reductions occur in mixed 
funds with a 2.85 bps decrease and bond funds with a decrease of 1.82 bps, while equity funds show a 
smaller decline of 1.27 bps. The weaker effect for equity funds may reflect the fact that they already 
operate at relatively efficient scales or that they face structural costs that are harder to reduce. 

The results also vary by merger type. Cross-family and share class mergers produce the largest reductions 
in expense ratios in acquiring funds: a 2.26-bps fall in both cases, while within-family mergers show no 
statistically significant effect overall. The most pronounced reductions in expense ratios occur in cross-
family mergers involving mixed funds (a decrease of 4.61 bps) and share class consolidations involving 
bond funds (a decrease of 5.03 bps).36 

35 The hypothesis of equal trends before acquisition between acquiring and non-acquiring funds cannot be rejected (see infra Table 
D7 in Appendix D). 
36 Because some mergers occur near the end of the sample period, the analysis may not fully capture their long-term effects. While 
this is a possibility, additional analysis, not reported here, indicates that most fee adjustments occur in the year of the merger and 
the following year, with little change thereafter. This suggests that the main effects are typically realized within a short window after 
the merger. 



DIVISION OF ECONOMIC AND RISK ANALYSIS 10 

Table 3. Fee Changes Following Fund Mergers: Expense Ratio (Percentage Points) 

All Funds Equity Bond Mixed 

Acquisition -0.0177 -0.0127 -0.0182 -0.0285 

Cross-Family -0.0226 -0.0143 -0.0150 -0.0461 

Within-Family − − -0.0135 − 

Share Class -0.0226 − -0.0503 − 

Numbers represent the average change, in percentage points (pp), in the expense ratio of acquiring funds after a merger, relative to 
funds that did not undergo a merger, controlling for observable fund characteristics and fixed effects. For example, a 0.0177 pp 
reduction in the expense ratio implies that funds with a 1% expense ratio would have an expense ratio of 0.9823% (= 1-0.0177) after 
a merger. All reported estimates are significant at least at the 5% significance level. The symbol “−” indicates no statistically 
significant effect at the 5% level. The regressions for all funds are based on 238,483 fund-year observations from 39,598 unique 
funds. The sample includes 132,808 observations for pure equity funds (20,202 funds), 51,401 observations for pure bond funds 
(8,771 funds), and 54,274 observations for mixed funds (10,625 funds). 

While these reductions may seem modest, they provide evidence that mergers are associated with lower 
fees, which may benefit investors..37 In an industry where expense ratios have already been trending 
downward,38 fund consolidations can be associated with fee savings to investors, although the benefits 
depend on the type of fund and the structure of the merger. However, fee reductions alone do not 
guarantee improved investor outcomes. The net benefit also depends on post-merger fund performance 
and investor-facing policies, such as short-term trading restrictions or minimum holding periods imposed 
by fund families to discourage rapid turnover, which are not analyzed in this paper.39 

Management Fees 
Management fees are the portion of a fund’s expenses paid to its investment adviser (or affiliated firms) 
for managing the portfolio.40 These fees typically cover portfolio manager compensation, investment 
research, trading decisions, and risk management. They are one of the largest components of a fund’s 
overall expense ratio.41 Mergers may reduce management fees by eliminating overlapping functions, such 
as duplicative research teams or trading operations, especially when two funds with similar strategies are 
combined. 

37 For example, the estimated effect of -0.0285 pp on mixed funds from Table 2 means that an investor with a $100,000 invested in a 
mixed fund, with an annual return of 6%, would save about $1,400, $3,500, and $7,700 over a period of 20, 30, and 40 years 
respectively. Note that these estimates assume constant fund performance post-merger, but mergers may also decrease fund 
returns if they experience decreasing returns, potentially offsetting some of the benefits from lower fees. Therefore, the net effect on 
investors will ultimately depend on the balance between fees savings and performance changes. 
38 Duval & Johnson (2024) document that from 1996 to 2023, the expense ratios of equity mutual funds decreased by 60%, while for 
bond funds they declined by 56%. James Duvall & Alex Johnson, Trends in the Expenses and Fees of Funds, 2023 30 ICI Research 
Perspective, Vol. 30, No. 2 (Mar. 2024), available at https://www.ici.org/files/2024/per30-02.pdf.    
39 Some mutual fund families impose short-term trading fees or restrict investors from repurchasing shares within a certain period 
after redemption (e.g., 30–90 days), commonly referred to as round-trip or frequent trading restrictions. These are not formal 
redemption restrictions but may affect investor behavior. See U.S. Sec. & Exch. Comm’n, Office of Inv. Educ. & Advocacy, Investor 
Bulletin: Mutual Fund Fees and Expenses, SEC Pub. No. 162 (May 2014), https://www.sec.gov/files/ib_mutualfundfees.pdf. 
40 See Investor Bulletin: Mutual Fund Fees and Expenses, supra note 39. 
41 Inv. Co. Inst., ICI Investor Awareness Series – Frequently Asked Questions About Mutual Fund Fees (2024), 
https://www.ici.org/system/files/attachments/pdf/bro_mf_fees_faq_p.pdf. 

https://www.ici.org/system/files/attachments/pdf/bro_mf_fees_faq_p.pdf
https://www.sec.gov/files/ib_mutualfundfees.pdf
https://www.ici.org/files/2024/per30-02.pdf


DIVISION OF ECONOMIC AND RISK ANALYSIS 11 

Table 4 reports unweighted mean management fees for acquiring and acquired mutual funds involved in 
mergers between 2011 and 2023, segmented by fund type and merger timing. These descriptive statistics 
offer a snapshot of fee structures around the time of mergers, without implying causality. In general, 
acquired funds exhibited slightly higher management fees than acquiring funds prior to the merger.42 The 
lower average fees in the post-merger acquiring funds (which represent the consolidated entities) suggest 
that investors from the acquired funds may have experienced modest fee reductions, provided they 
remained in the merged fund. The differences are most notable in equity and mixed funds, while bond 
funds show little to no difference.43 

In addition to the observed fee reductions for investors from acquired funds, acquiring funds themselves 
also show a modest decline in average management fees following the merger. As shown in Table 4, the 
mean fee for acquiring funds decreased from 0.61% pre-merger to 0.57% post-merger. This pattern is 
consistent across fund types, with the most pronounced drop seen in mixed funds (from 0.54% to 0.43%). 
These reductions may reflect economies of scale or competitive pressures to align fees downward after 
consolidation. The data suggest that mergers may offer cost efficiencies not only to absorbed investors but 
also within the acquiring fund’s broader fee structure. 

Table 4. Summary Statistics for Acquired and Acquiring Funds: Management Fees (Unweighted Means, 
Percentage) 

Acquired Before Acquiring Before Acquiring After 

All 0.60 0.61 0.57 

Equity 0.68 0.70 0.65 

Bond 0.45 0.45 0.43 

Mix 0.55 0.54 0.43 

Numbers represent unweighted mean fee levels (in percentage) for mutual funds involved in mergers between 2011 and 2023. 
Acquired Before: Acquired funds in the pre-merger period. Acquiring Before: Acquiring funds in the pre-merger period. Acquiring 
After: Acquiring funds in the post-merger period. All differences in mean management fees between acquired funds (pre-merger) 
and acquiring funds (both pre- and post-merger) are statistically significant at the 1% level based on two-sample t-tests using 
unweighted means, except for bond and mixed funds when comparing acquired funds to acquiring funds in the pre-merger period, 
where the differences are not statistically significant. 

Table 5 presents the estimated effects of mergers on management fees of acquiring funds. On average, 
mergers reduce management fees by 0.0112 pp, or 1.12 bps.44 The largest reductions are observed in 
mixed funds, with a decrease of 4.49 bps, followed by bond funds with a 1.41 bps decrease. In contrast, 
equity funds show no statistically significant change. This pattern closely mirrors the results for expense 

42 The differences are statistically significant at the 1% level based on two-sample t-tests using unweighted means for all and for 
equity funds. 
43 All differences are statistically significant at the 1% level based on two-sample t-tests using unweighted means. 
44 The hypothesis of equal trends before acquisition between acquiring and non-acquiring funds cannot be rejected (see infra Table 
D7 in Appendix D). 



DIVISION OF ECONOMIC AND RISK ANALYSIS 12 

ratios and suggests that equity funds may already operate at efficient scale or face structural costs that are 
harder to reduce. 

The effects also vary by merger type. Across all acquiring funds, share class consolidations produce the 
largest overall reduction in management fees: a decrease of 2.12 bps, followed by cross-family mergers 
with a 1.15-bps decrease and within-family mergers with a decrease of 0.79 bps. The most pronounced 
effect is for cross-family mergers involving mixed funds, which see a reduction of 5.72 bps. Another 
notable result is the 3.69 bps reduction in share class consolidations involving bond funds. 

Table 5. Fee Changes Following Fund Mergers: Management Fees (Percentage Points) 

All Funds Equity Bond Mixed 

Acquisition -0.0112 − -0.0141 -0.0449 

Cross-Family -0.0115 − − -0.0572 

Within-Family -0.0079 − -0.0162 -0.0262 

Share Class -0.0212 − -0.0369 -0.0285 

Numbers represent the average change, in percentage points, in management fees of acquiring funds after a merger, relative to 
other funds that did not undergo a merger, controlling for observable fund characteristics and fixed effects. All reported estimates are 
significant at least at the 5% significance level. The symbol “−” indicates no statistically significant effect at the 5% level. The 
regressions for all funds are based on 205,355 fund-year observations from 33,812 unique funds. The sample includes 116,150 
observations for pure equity funds (17,542 funds), 46,553 observations for pure bond funds (7,979 funds), and 42,652 observations 
for mixed funds (8,291 funds). 

These results are consistent with the possibility that mergers are associated with operational efficiencies 
that may benefit investors, particularly in bond and mixed funds. However, as with expense ratios, the 
benefits are not uniform across all fund types or merger types. Equity funds, in particular, appear less 
likely to experience fee reductions following a merger. 

12b-1 Fees 
12b-1 fees are annual charges that cover a fund’s distribution and shareholder service expenses.45 Under 
FINRA rules, 12b-1 fees are capped at 1% annually, with sub-limits of 0.75% for marketing and 0.25% 
for servicing (for no-load funds, FINRA rules cap the fee at 0.25%). These limits apply regardless of how 
the fees are allocated, and funds cannot exceed these thresholds. While most funds do not charge the 
maximum permitted amount, the cap constrains potential variation in these fees.46 They help pay for 

45 See U.S. Sec. & Exch. Comm’n, Mutual Fund and ETF Fees and Expenses – Investor Bulletin, Investor.gov (July 23, 
2025), https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/mutual-fund-
and-etf-fees-and-expenses-investor-bulletin. 
46 These fees are capped by FINRA Rule 2341, which prohibits FINRA member broker-dealers from offering or selling the shares of 
a fund that imposes sales charges that are deemed excessive under the rule.   

https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/mutual-fund
https://Investor.gov


DIVISION OF ECONOMIC AND RISK ANALYSIS 13 

brokerage commissions, marketing and advertising, shareholder support, and platform access fees that 
make funds available through intermediaries.47 

Mergers may reduce 12b-1 fees by giving the combined fund gains bargaining power or scale advantages 
in distribution. However, these fees are often governed by ongoing distribution arrangements that are 
embedded in fund structures and may be difficult to renegotiate.48 In addition, as mentioned earlier, 
FINRA rules cap 12b-1 fees at 1% annually (0.75% for marketing and 0.25% for servicing), which limits 
the scope for fee reductions. In practice, most funds charge well below these limits, particularly no-load 
funds, so mergers have little room to affect these fees. 

Table 6 shows unweighted mean 12b-1 fees for acquiring and acquired mutual funds involved in mergers 
between 2011 and 2023, categorized by fund type and merger timing. These descriptive statistics provide 
an idea on how 12b-1 fees differ across fund roles and time periods surrounding mergers. Prior to the 
merger, acquired funds consistently had higher 12b-1 fees than acquiring funds.49 The lower average 12b-
1 fees in the post-merger acquiring funds suggest that investors from the acquired funds may have seen a 
meaningful reduction in these fees, assuming they remained in the consolidated fund.50 

Acquiring funds also experienced a slight reduction in 12b-1 fees following the merger. As shown in 
Table 6, the average 12b-1 fee for acquiring funds declined from 0.61% pre-merger to 0.57% post-merger. 
This trend is consistent across all fund types, with the most notable decrease observed in mixed funds 
(from 0.54% to 0.43%). These reductions may reflect post-merger cost rationalization or strategic fee 
alignment across the consolidated fund lineup. As such, the data suggest that mergers may be associated 
with modest fee benefits not only for investors from acquired funds but also for those already invested in 
the acquiring funds. 

47 12b-1 fees took their name from the SEC rule that authorizes a fund to pay them. The rule allows a fund to pay distribution fees 
out of fund assets only if the fund has adopted a plan (12b-1 plan) authorizing their payment. See Mutual Fund Fees and Expenses, 
Investor.gov, https://www.investor.gov/introduction-investing/investing-basics/glossary/mutual-fund-fees-and-expenses (last visited 
Aug. 18, 2025).   
48 See, e.g., Investment Company Institute, Comment Letter on Mutual Fund Distribution Fees; Confirmations (SEC File No. S7-15-
10) (Nov. 5, 2010), https://www.sec.gov/comments/s7-15-10/s71510-1.pdf (discussing the rigidity of distribution agreements and the 
difficulty of renegotiating dealer contracts). 
49 All differences are statistically significant at the 1% level based on two-sample t-tests using unweighted means. 
50 All differences are statistically significant at the 1% level based on two-sample t-tests using unweighted means. 

https://www.sec.gov/comments/s7-15-10/s71510-1.pdf
https://www.investor.gov/introduction-investing/investing-basics/glossary/mutual-fund-fees-and-expenses
https://Investor.gov


DIVISION OF ECONOMIC AND RISK ANALYSIS 14 

Table 6.   Summary Statistics for Acquired and Acquiring Funds: 12b-1 Fees (Unweighted Means, 
Percentage) 

Acquired Before Acquiring Before Acquiring After 

All 0.64 0.39 0.45 

Equity 0.63 0.43 0.48 

Bond 0.67 0.32 0.38 

Mix 0.63 0.39 0.42 

Numbers represent unweighted mean fee levels (in percentage) for mutual funds involved in mergers between 2011 and 2023. 
Acquired Before: Acquired funds in the pre-merger period. Acquiring Before: Acquiring funds in the pre-merger period. Acquiring 
After: Acquiring funds in the post-merger period. All differences in mean 12b-1 fees between acquired funds (pre-merger) and 
acquiring funds (both pre- and post-merger) are statistically significant at the 1% level based on two-sample t-tests using 
unweighted means. 

Table 7 presents the estimated effects of mergers on 12b-1 fees in acquiring funds. Most of the results are 
not statistically significant, meaning there is no clear evidence of a consistent change in these fees after a 
merger. The one exception is for bond funds, which show a small but statistically significant increase of 
0.36 bps (cross-family mergers primarily drive the increase in bonds’ 12b-1 fees). 

Table 7. Fee Changes Following Fund Mergers: 12b-1 Fees (Percentage Points) 

All Funds Equity Bond Mixed 

Acquisition − − 0.0036 − 

Cross-Family − − 0.0044 − 

Within-Family − − − − 

Share Class − − − − 

Numbers represent the average change, in percentage points, in 12b-1 fees of acquiring funds after a merger, relative to other funds 
that did not undergo a merger, controlling for observable fund characteristics and fixed effects. All reported estimates are significant 
at least at the 5% significance level. The symbol “−” indicates no statistically significant effect at the 5% level. The regressions for all 
funds are based on 115,146 fund-year observations from 18,429 unique funds. The sample includes 61,337 observations for pure 
equity funds (8,999 funds), 25,377 observations for pure bond funds (4,167 funds), and 28,432 observations for mixed funds (5,263 
funds). 

These results suggest that, unlike expense ratios and management fees, 12b-1 fees tend to remain 
unchanged after mergers. This means that the fee reductions observed in the raw data in Table 6 might be 
associated with differences in fund composition rather than a causal effect of the merger. 

The persistence of 12b-1 likely reflects the contractual and structural nature of distribution arrangements, 
which are less flexible than other operational costs. While mergers may improve efficiency in other areas, 
they appear to have limited influence on how funds pay for distribution and marketing. 



DIVISION OF ECONOMIC AND RISK ANALYSIS 15 

Summary and Conclusions 
This white paper provides a comprehensive look at post‑merger fee changes in acquiring funds. Using a 
dataset of 1,846 acquiring funds involved in mergers between 2011 and 2023, the analysis shows that fee 
changes associated with mergers vary widely depending on the type of fund and the structure of the 
merger. 

The results show that mergers are generally associated with lower expense ratios and management fees. 
The largest reductions are for mixed funds involved in cross-family mergers and for bond funds that 
undergo share class consolidations. These cost savings may reflect economies of scale or the elimination 
of overlapping operations. In contrast, 12b-1 fees, used to cover distribution and shareholder service 
expenses, remain largely unchanged, with only a small increase observed in bond funds. This suggests 
that while operational costs may fall after a merger, distribution agreements are more resistant to change. 

While the analysis shows that fee reductions occur in many cases, the magnitude and even the presence of 
these benefits vary by fund type and merger structure.   Lower fees do not necessarily translate into higher 
net returns, because other factors can offset these savings. For instance, one study finds that while 
expense ratios fall, fund gross returns may also decrease due to liquidity constraints and diminishing 
returns to scale.51 In addition, changes in investor-facing policies, such as short-term trading fees or 
round-trip restrictions imposed by some fund families to discourage rapid turnover, may also affect 
investor outcomes. These policies are not formal redemption restrictions but can influence investor 
behavior. Importantly, the experience of investors in acquiring and acquired funds may differ, making it 
difficult to generalize about aggregate investor benefits.   For fund managers, the results suggest that 
mergers, particularly those involving bond or mixed funds, may be associated with improved efficiency 
and lower fees. Equity funds, by contrast, appear less likely to benefit from cost reductions. 

It is also important to acknowledge the limitations of this analysis. Due to data limitations, the study 
cannot fully identify the mechanisms behind the observed fee reductions. While the savings likely result 
from a combination of operational efficiencies and scale advantages, the data do not allow us to determine 
which of these factors plays a larger role. Regardless of the exact mechanism, the data suggest that 
investors in acquiring funds often exhibit lower fees following certain types of mergers. While acquired 
funds are not observable after the merger, the lower average fees in the post-merger acquiring funds 
suggest that investors from acquired funds likely benefited as well (assuming they remained in the 
merged entity). Although this paper does not track absorbed funds directly, the fee reductions observed in 
acquiring funds provide indirect evidence of potential benefits for those investors. 

Additionally, the findings are based on U.S.  mutual funds and ETFs and may not generalize to other 
types of investment vehicles or to international markets. Finally, the statistical method used, DiD, relies 
on the assumption that mergers are not systematically driven by unobserved factors. The inclusion of fund 
fixed effects and control variables helps mitigate, but does not eliminate, this concern. In addition, the 
estimated effects reflect average changes in fees across all post-merger years, rather than isolating short-

51 McLemore (2019). 



DIVISION OF ECONOMIC AND RISK ANALYSIS 16 

term or long-term dynamics. As such, the analysis does not identify whether cost savings emerge 
immediately or gradually over time. 

Despite these caveats, the evidence presented here suggests that fund mergers are often associated with 
cost savings for investors, particularly in the form of lower expense ratios and management fees for 
certain types of funds. 

Future research could explore methods to estimate post-merger outcomes for acquired funds, such as 
aggregating the acquiring and acquired funds’ characteristics before the merger and comparing them to 
the consolidated entity afterward. However, this approach would require strong identifying assumptions. 
Most notably, that any observed change in fees is attributable solely to the merger itself, rather than to 
other structural or market-driven changes. 



DIVISION OF ECONOMIC AND RISK ANALYSIS 17 

Appendix A: Data and Sample Construction 

Data Sources and Coverage 
• Source: CRSP Mutual Fund Database 
• Time Period: 2010-2023 
• Mergers during 2011-2023 to allow for at least one year of pre-merger observations 
• Final Sample Size: Varies by dependent variable due to data availability 

Data Cleaning Procedures 

Expense Ratios 
• Format: Originally in decimal format 
• Cleaning: 

o Removed negative values 
o Winsorized at 1st and 99th percentiles 
o Converted to percentage points for interpretation 

Management Fees 
• Format: Already in percentage format per CRSP documentation 
• Economic Constraints Applied:   

o Negative values removed 
o Winsorized at 1st and 99th percentiles 

12b-1 Fees 
• Format: Decimal format requiring conversion 
• Regulatory Constraints:   

o Capped at 1% regulatory limit (For no-load funds, FINRA rules cap the fee at 0.25%.) 
o Cannot exceed expense ratios 
o Winsorized at 1st and 99th percentiles 

Sample Restrictions 
• Excluded ETNs and variable annuity funds 
• Required non-missing control variables for the period 2010-2023 
• Focused on mergers occurring 2011 and 2023 to allow at least one year of pre-merger 

observations for mergers completed in 2011 



DIVISION OF ECONOMIC AND RISK ANALYSIS 18 

Appendix B: Variable Construction 

Fund Classification Based on Holdings 
• Equity Funds:   ≥80% average equity holdings AND <10% fixed income 
• Bond Funds: ≥80% average fixed income holdings AND <10% equity 
• Mixed Funds: All funds not meeting equity or bond criteria 

Merger Variables 
• Within-Family Mergers: Same management company, different funds 
• Cross-Family Mergers: Different management companies 
• Share Class Consolidations: Same fund group, different share classes 



DIVISION OF ECONOMIC AND RISK ANALYSIS 19 

Appendix C: Econometric Model 

Model Specification 
The analysis uses a DiD framework with fund fixed effects to estimate fee changes associated with 
mergers. The identification strategy uses the staggered timing of mergers across funds, comparing 
acquiring funds before and after merger completion to a control group of non-acquiring funds. Acquired 
funds are excluded from the estimation sample due to the inability to observe their post-merger 
characteristics. 

The basic specification is: 

     

where: 

• 𝑌𝑌𝑖𝑖 𝑖𝑖 is the outcome variable for fund 𝐴𝐴 in year 𝐴𝐴 (for example, the expense ratio) 
• 𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝑖𝑖 𝑖𝑖 is an indicator equal to 1 for acquiring funds in the year of the acquisition and all 

years after that 
• 𝑋𝑋𝑖𝑖 𝑖𝑖 is a set of time-varying fund controls 
• 𝛼𝛼 𝑖𝑖 represents fund fixed effects 
• 𝛿𝛿𝑖𝑖 represents year fixed effects 
• 𝜀𝜀𝑖𝑖 𝑖𝑖 is the error term, which is assumed to be correlated within funds52 

The fund controls include total net assets, the portfolio turnover ratio, the age of the fund (in years), and 
the number of funds in the family (all in logs). These variables control for observable heterogeneity in 
cost structures and scale economies that may be correlated with fees. Total net assets proxy for economies 
of scale, as larger funds may spread fixed costs over a broader asset base and negotiate lower service fees 
(Chen et al., 2004).53 The turnover ratio captures trading intensity and portfolio rebalancing activity, 
which may correlate with transaction costs and active management expenses (Carhart, 1997).54 Fund age 
reflects potential reputation effects, legacy pricing, and survivorship dynamics (Elton et al., 1996).55 The 
number of funds in the family proxies for the scale of the fund complex, which may influence internal 
cross-subsidization, shared infrastructure, and bargaining power with intermediaries (Gaspar et al., 
2006).56 Including these controls helps reduce confounding factors when estimating fee changes 
associated with mergers.. 

52 For this reason, the analysis estimates standard errors and t-stats using clustering at the fund level. 
53 See supra note 29. 
54 Mark M. Carhart, On Persistence in Mutual Fund Performance, 52 J. Fin. 57, 57–82 (1997). https://doi.org/10.1111/j.1540-
6261.1997.tb03808.x. 
55 Edwin J. Elton, Martin J. Gruber & Christopher R. Blake, The Persistence of Risk-Adjusted Mutual Fund Performance, 69 J. 
Bus. 133, 133–57 (1996), https://www.jstor.org/stable/2353461. 
56 José-Miguel Gaspar, Massimo Massa & Pedro Matos, Favoritism in Mutual Fund Families? Evidence on Strategic Cross-Fund 
Subsidization, 61 J. Fin. 73, 73–104 (2006), https://doi.org/10.1111/j.1540-6261.2006.00831.x. 

https://doi.org/10.1111/j.1540-6261.2006.00831.x
https://www.jstor.org/stable/2353461
https://doi.org/10.1111/j.1540


DIVISION OF ECONOMIC AND RISK ANALYSIS 20 

To examine heterogeneous effects by merger type, the analysis also estimates a disaggregated 
specification: 

     

where Post_Cross𝑖𝑖 𝑖𝑖 , Post_Within𝑖𝑖 𝑖𝑖 , and Post_Share𝑖𝑖 𝑖𝑖 are interactions between merger type indicators 
(cross-family, within family, and cross-share class) and the post-merger period (𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝑖𝑖 𝑖𝑖 ). 

The estimated post-merger effects reflect average changes in fees across all years following the merger. 
The model does not separately estimate short-term versus long-term dynamics. As such, if cost savings 
from mergers emerge gradually due to integration costs or operational frictions, the current specification 
would capture the average effect over that adjustment period. Future work could explore dynamic 
treatment effects to better understand the timing of fee changes. 

Parallel Trends Test 
The validity of the DiD approach relies on the parallel trends assumption—that acquiring and non-
acquiring funds would have followed similar trajectories in the absence of mergers. This paper tests this 
assumption by examining the significance of a linear pre-treatment trend (Pre_Trend𝑖𝑖 𝑖𝑖 ): 

  

where Pre_Trend𝑖𝑖 𝑖𝑖 = 𝑇𝑇 𝑇𝑇𝑇𝑇𝑇𝑇 𝐴𝐴𝑇𝑇𝑇𝑇𝑖𝑖 × 𝑇𝑇 𝐴𝐴𝑇𝑇𝑇𝑇 𝐴𝐴𝐴𝐴 𝑀𝑀𝑇𝑇𝑇𝑇𝑀𝑀𝑇𝑇𝑇𝑇𝑖𝑖 𝑖𝑖 

• 𝑇𝑇 𝑇𝑇𝑇𝑇𝑇𝑇 𝐴𝐴𝑇𝑇𝑇𝑇𝑖𝑖 = 1 if fund i acquired a fund at any year during 2011-2023 
• 𝑇𝑇 𝐴𝐴𝑇𝑇𝑇𝑇 𝐴𝐴𝐴𝐴 𝑀𝑀𝑇𝑇𝑇𝑇𝑀𝑀𝑇𝑇𝑇𝑇𝑖𝑖 𝑖𝑖 = Number of years until acquisition 

A significant 𝜃𝜃1 would indicate violation of the parallel trends assumption.DIVISION OF ECONOMIC AND RISK ANALYSIS 21 

Appendix D: Detailed Econometric Results 

Expense Ratios 

Table D1. Fee Changes Following Fund Mergers: Expense Ratio (Percentage Points) 

All Funds Equity Bond Mixed 

Acquisition -0.0177*** -0.0127** -0.0182*** -0.0285*** 
(0.0040) (0.0051) (0.0067) (0.0106) 

Total Net Assets -0.0087*** -0.0095*** -0.0048*** -0.0050*** 
(0.0004) (0.0005) (0.0008) (0.0012) 

Turnover Ratio 0.0234*** 0.0322*** 0.0123** 0.0162*** 
(0.0023) (0.0033) (0.0048) (0.0037) 

Age (Years) 0.0100*** 0.0127*** -0.0006 -0.0006 
(0.0015) (0.0019) (0.0024) (0.0042) 

Family Size -0.0018** 0.0023** -0.0010 -0.0095*** 
(0.0008) (0.0010) (0.0012) (0.0023) 

Observations 238,483 132,808 51,401 54,274 

Number of Funds 39,598 20,202 8,771 10,625 

R-squared 0.090 0.162 0.070 0.016 

Dependent variable: Expense ratio in percentage points. Fixed effects regressions with standard errors clustered by 
fund. Year dummy variables included but not reported. Controls include log total net assets, log turnover ratio, log 
fund age (in years), and log fund family size (number of funds in the family). Standard errors in parentheses. ** 
p<0.05, *** p<0.01. 



DIVISION OF ECONOMIC AND RISK ANALYSIS 22 

Table D2. Fee Changes Following Fund Mergers: Expense Ratio by Merger Type (Percentage Points) 

All Funds Equity Bond Mixed 

Cross-Family -0.0226*** -0.0143** -0.0150** -0.0461*** 
(0.0048) (0.0060) (0.0075) (0.0129) 

Within-Family -0.0079 -0.0086 -0.0135** 0.0077 
(0.0042) (0.0056) (0.0059) (0.0082) 

Share Class -0.0226*** -0.0206 -0.0503*** -0.0164 
(0.0073) (0.0112) (0.0150) (0.0130) 

Total Net Assets -0.0087*** -0.0095*** -0.0048*** -0.0050*** 
(0.0004) (0.0005) (0.0008) (0.0012) 

Turnover Ratio 0.0233*** 0.0322*** 0.0124*** 0.0161*** 
(0.0023) (0.0033) (0.0048) (0.0037) 

Age (Years) 0.0099*** 0.0126*** -0.0005 -0.0008 
(0.0015) (0.0019) (0.0024) (0.0042) 

Family Size -0.0019** 0.0023** -0.0010 -0.0098*** 
(0.0008) (0.0010) (0.0012) (0.0023) 

Observations 238,483 132,808 51,401 54,274 

Number of Funds 39,598 20,202 8,771 10,625 

R-squared 0.090 0.162 0.070 0.017 

Dependent variable: Expense ratio in percentage points. Fixed effects regressions with standard errors clustered by 
fund. Year dummy variables included but not reported. Controls include log total net assets, log turnover ratio, log 
fund age (in years), and log fund family size (number of funds in the family). Standard errors in parentheses. ** 
p<0.05, *** p<0.01.   



DIVISION OF ECONOMIC AND RISK ANALYSIS 23 

Management Fees 

Table D3. Fee Changes Following Fund Mergers: Management Fees (Percentage Points) 

All Funds Equity Bond Mixed 

Acquisition -0.0112*** 0.0007 -0.0141** -0.0449*** 
(0.0038) (0.0047) (0.0063) (0.0105) 

Total Net Assets 0.0161*** 0.0156*** 0.0120*** 0.0237*** 
(0.0005) (0.0007) (0.0008) (0.0014) 

Turnover Ratio -0.0013 -0.0072* -0.0104*** 0.0058 
(0.0024) (0.0038) (0.0037) (0.0044) 

Age (Years) 0.0149*** 0.0147*** 0.0121*** 0.0111** 
(0.0017) (0.0023) (0.0027) (0.0045) 

Family Size 0.0051*** 0.0069*** 0.0007 0.0065*** 
(0.0009) (0.0012) (0.0015) (0.0024) 

Observations 205,355 116,150 46,553 42,652 

Number of Funds 33,812 17,542 7,979 8,291 

R-squared 0.057 0.064 0.093 0.047 

Dependent variable: Management fees in percentage points. Fixed effects regressions with standard errors 
clustered by fund. Year dummy variables included but not reported. Controls include log total net assets, log 
turnover ratio, log fund age (in years), and log fund family size (number of funds in the family). Standard errors in 
parentheses. ** p<0.05, *** p<0.01. 



DIVISION OF ECONOMIC AND RISK ANALYSIS 24 

Table D4. Fee Changes Following Fund Mergers: Management Fees by Merger Type (Percentage 
Points) 

All Funds Equity Bond Mixed 

Cross-Family -0.0115** 0.0028 -0.0086 -0.0572*** 
(0.0045) (0.0055) (0.0069) (0.0130) 

Within-Family -0.0079 0.0015 -0.0162** -0.0262*** 
(0.0041) (0.0054) (0.0063) (0.0085) 

Share Class -0.0212*** -0.0197 -0.0369** -0.0285** 
(0.0079) (0.0131) (0.0150) (0.0126) 

Total Net Assets 0.0161*** 0.0156*** 0.0120*** 0.0238*** 
(0.0005) (0.0007) (0.0008) (0.0014) 

Turnover Ratio -0.0013 -0.0072 -0.0103*** 0.0057 
(0.0024) (0.0038) (0.0037) (0.0044) 

Age (Years) 0.0149*** 0.0147*** 0.0122*** 0.0110** 
(0.0017) (0.0023) (0.0027) (0.0046) 

Family Size 0.0051*** 0.0070*** 0.0007 0.0062*** 
(0.0009) (0.0012) (0.0015) (0.0024) 

Observations 205,355 116,150 46,553 42,652 

Number of Funds 33,812 17,542 7,979 8,291 

R-squared 0.057 0.064 0.093 0.047 

Dependent variable: Management fees in percentage points. Fixed effects regressions with standard errors clustered 
by fund. Year dummy variables included but not reported. Controls include log total net assets, log turnover ratio, log 
fund age (in years), and log fund family size (number of funds in the family). Standard errors in parentheses. ** 
p<0.05, *** p<0.01.   



DIVISION OF ECONOMIC AND RISK ANALYSIS 25 

12b-1 Fees 

Table D5. Fee Changes Following Fund Mergers: 12b-1 Fees (Percentage Points) 

All Funds Equity Bond Mixed 

Acquisition 0.0000 -0.0019 0.0036** 0.0006 
(0.0014) (0.0019) (0.0015) (0.0038) 

Total Net Assets 0.0013*** 0.0013*** 0.0013*** 0.0014*** 
(0.0002) (0.0003) (0.0004) (0.0005) 

Turnover Ratio -0.0003 0.0008 -0.0013 -0.0012 
(0.0008) (0.0015) (0.0014) (0.0011) 

Age (Years) 0.0028*** 0.0040*** 0.0015 0.0014 
(0.0008) (0.0012) (0.0013) (0.0016) 

Family Size -0.0012*** -0.0016*** -0.0009 -0.0006 
(0.0004) (0.0005) (0.0008) (0.0006) 

Observations 115,146 61,337 25,377 28,432 

Number of Funds 18,429 8,999 4,167 5,263 

R-squared 0.009 0.010 0.009 0.008 

Dependent variable: 12b-1 fees in percentage points. Fixed effects regressions with standard errors clustered by 
fund. Year dummy variables included but not reported. Controls include log total net assets, log turnover ratio, log 
fund age (in years), and log fund family size (number of funds in the family). Standard errors in parentheses. ** 
p<0.05, *** p<0.01. 



DIVISION OF ECONOMIC AND RISK ANALYSIS 26 

Table D6. Fee Changes Following Fund Mergers: 12b-1 Fees by Merger Type (Percentage Points) 

All Funds Equity Bond Mixed 

Cross-Family -0.0005 -0.0024 0.0044*** -0.0010 
(0.0019) (0.0025) (0.0017) (0.0054) 

Within-Family 0.0002 -0.0018 0.0028 0.0023 
(0.0015) (0.0020) (0.0029) (0.0026) 

Share Class 0.0013 -0.0011 0.0016 0.0030 
(0.0012) (0.0013) (0.0013) (0.0028) 

Total Net Assets 0.0013*** 0.0013*** 0.0013*** 0.0014*** 
(0.0002) (0.0003) (0.0004) (0.0005) 

Turnover Ratio -0.0003 0.0008 -0.0013 -0.0012 
(0.0008) (0.0015) (0.0014) (0.0011) 

Age (Years) 0.0028*** 0.0040*** 0.0015 0.0013 
(0.0008) (0.0012) (0.0013) (0.0016) 

Family Size -0.0012*** -0.0016*** -0.0009 -0.0007 
(0.0004) (0.0005) (0.0008) (0.0006) 

Observations 115,146 61,337 25,377 28,432 

Number of Funds 18,429 8,999 4,167 5,263 

R-squared 0.009 0.010 0.009 0.008 

Dependent variable: 12b-1 fees in percentage points. Fixed effects regressions with standard errors clustered by 
fund. Year dummy variables included but not reported. Controls include log total net assets, log turnover ratio, log 
fund age (in years), and log fund family size (number of funds in the family). Standard errors in parentheses. ** 
p<0.05, *** p<0.01.   



DIVISION OF ECONOMIC AND RISK ANALYSIS 27 

Table D7. Test of Parallel Linear Trends for All Fees 

Expense Ratio Management Fee 12b-1 Fee 

Trend -0.0020 -0.0002 -0.0003 
(0.0012) (0.0010) (0.0003) 

Observations 230,140 197,430 110,133 

R-squared 0.086 0.056 0.009 

Dependent variable: Fees in percentage points. Fixed effects regressions with standard errors clustered by fund. 
Year dummy variables included but not reported. Controls include log total net assets, log turnover ratio, log fund 
age (in years), and log fund family size (number of funds in the family). The trend variable is the interaction between 
the treatment group indicator (acquisition) and a variable measuring the number of years prior to the treatment 
implementation. It measures the difference in trends between treated and control funds in the pre-treatment period. 
The control funds serve as the baseline group against which the pre-treatment trajectory of treated funds is 
compared. Standard errors in parentheses. ** p<0.05, *** p<0.01.