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Article: Market impact hurting mutual fund returns
- Article from:
- THE JOURNAL RECORD
- Article date:
- July 14, 1999
- Author:
CopyrightCopyright 1999 The Journal Record. Provided by ProQuest LLC. (Hide copyright information)
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Something is eating into mutual fund returns. It is called market
impact cost -- in essence, the impact that buy or sell orders can
have on stock prices. And Barra Inc., a research and consulting firm
in Berkeley, Calif., has developed a program to let investors see how
much those costs are affecting a portfolio's performance.
"Like expense ratios, market impact creates a cost that funds have
to overcome before they can add any value," said Nicolo Torre,
Barra's managing director for research. "The lower the hurdle, the
more likely that they will be able to do that."
Barra, which began selling market impact data to institutional
investors about a year ago, has picked up two mutual fund ...