Mutual Fund Competition
A mutual fund is a corporation that pools large sums of money ranging from one million to several billions of dollars, pooled from millions of individual investors, just like you, who wish to save or make money. An individual or a team of professional money managers who invest the pool of money into stocks, bonds, or other securities runs mutual funds. I believe the form of competition a mutual fund would encounter would be monopolistic competition. The mutual fund competitive market would consist of the 10-12 large investment houses. Examples are Charles Schwab, Merrill Lynch, Fidelity, etc. etc. A couple of examples of the funds available are income funds, and growth funds.
Taken as a whole, my suggestion would be that large mutual fund markets are imperfectly competitive. The quality of the product does not seem to be related to the price of the product and the quality-price relationship does not seem to be improving in spite of the large number of suppliers in the market. It?s difficult to determine the quality of the product being sold. Securities are difficult to price because risk is difficult to judge. Both the market and mutual funds are responsible for prices. I believe
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