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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 their main focus would be not only who the comp


When I look at rivalry, I look at the different mutual fund organizations which are competing for the independent investors business. What competition is doing, is trying to put together the best strategy to get the most returns for each investor. If they can do this, they can attract more small investors to put their money into their core stocks/bonds, which in turn can bring larger returns, as well as more profits to the mutual fund organization. Also, maybe a firm will offer more choices for an investor to invest into. Maybe they won’t charge for the transferring of funds from one investment to another. This strategy can lead to what firms like to call competitive advantage.

Starting at the center of Porter’s diagram, I looked at the competitors of a large mutual fund to help judge the extent of the competitive rivalry between the different firms. Their goal is to acquire competitive advantage within the mutual fund industry. They achieve competitive advantage when their firm is able to deliver the same benefits as their competitors, but drive home a better return for their clientele. Another consumer benefit that can help give a firm competitive advantage would be the ability to transfer funds within, without incurring transfer charges to the consumer. This enables the firm to create superior value for its customers and superior profits for themselves.

There is a large differentiation between the products in the mutual fund industry. The different stocks and bonds a single investor could decide from could almost seem endless. Is the knowledge of the investor perfect? Not always, but it could be. There are small independent investors who know a lot about the mutual fund industry, and there are some that don’t. Some of them know when it’s time to pull their money, and they seem to know where to put it. These investor’s have an incentive to carefully examine the fees and compare funds.

From an investor’s perspective, they see a lot of different mutual funds in the mutual fund industry. Other investors are not competing for each other’s business; it’s the mutual funds that are competing for all the small investors business. I would also say that investors fall in the category of monopolistic competition. There are both many buyers, and many sellers in the industry.

Some topics in this essay:
Funds Starting, Forces Investors, Firm B’s, Lynch Fidelity, , Las Vegas, mutual fund, fund industry, mutual fund industry, stocks bonds, mutual funds, competitive advantage, money firm, mutual fund organization, firm getting return, mutual fund organizations, fund organizations, enter market, fund organization, firm getting, mutual fund firm, Porter’s Five, Five Forces,

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Approximate Word count = 1675
Approximate Pages = 7 (250 words per page double spaced)


  

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