Mina Glambosky

Academic literature struggles to explain investors’ attitude towards fees and expenses charged by mutual funds. In general, investors have been found to exhibit a puzzling lack of interest in this non-trivial component of their total return, raising questions of rationality of real-world investor behavior. An emergence of exchange-traded funds (ETFs), their rapid proliferation in the past decades and distinct features, such as more simple expense structure, present a valuable opportunity to contribute to the debate surrounding the pricing of funds. To better understand the expense policy/fund flows dynamics, the authors first test a conjecture that later entrants in the ETF markets face a disadvantage in competition for fund flows. Then, they test whether competitive pressure can be successfully overcome by lowering expenses charged to ETF investors. The results suggest that, though it is not necessary to be a first entrant in a fund category to enjoy competitive advantage, an earlier market entry is beneficial for attracting fund flows. It is also found that later entrants’ to the ETF market successfully use the strategy of reducing their expense ratios. Firms with lower net expense ratios obtain greater investment, as evidenced by greater capitalization and market share, supporting our intuition that investors may acknowledge the merits of low-cost ETFs.

This study aims to examine the relationship between the Korean and Chinese game industries, and more broadly, the Chinese stock market. Chinese firms are the most important partners and investors in the Korean game industry, which has emerged as a significant component of a thriving Korean economy. The paper examines the impact of growth in the Chinese game industry on the Korean market and the correlation and cointegration between the stock returns of nineteen Korean game companies, the Chinese stock market, and Chinese game companies. A portfolio constructed from Korean game companies listed on the KOSPI and KOSDAQ is analyzed. Variation in the Shanghai Composite Index is shown to significantly influence the performance of Korean game companies. Further, the Korean game industry is sensitive to changes in the stock price of leading Chinese game publishers. The Korean game industry returns more closely mirror the returns of the Chinese stock markets rather than the Korean markets, evidence of the influence of China. As growth and returns in the Korean game industry are closely related to the performance of the Chinese market, future performance is subject to political and economic changes in China.