Investment company managers seek to increase the size of the funds being managed since the cost of overseeing additional amounts of money rises less than the revenue rate.

Question

Quizplus · Accepted Answer

This statement is true. Investment company managers often seek to increase the size of funds under management because the costs of running the fund do not increase proportionally with the amount of money being managed. For example, a larger fund can achieve economies of scale in trading costs and research expenses. As the size of the fund increases, the management fees charged to investors also increase, which can lead to greater revenue for the investment company.

Investment Company Managers Seek to Increase the Size of the Funds