Mutual Funds Performance in Russia

In contrast to many other countries oriented on the development of internal stock market collective investment in Russia still does not play an active role in mobilization of internal private savings. It is caused by low return level and higher risks of investment in Russian companies' securities as well as problems of lack of Russian mutual funds effectiveness. Based on a unique dataset which contains information about 755 open and interval mutual funds and its management companies' characteristics over a period 2000-2013 it is shown that cost reduction, effect of economy of scale, professionalism of managers, diversification of investments on the global market, specialization of management companies can have a positive impact on the profitability of funds. Based on our research one can conclude that effectiveness of fund share sales mainly determines by current return and level of management costs. Thus, increasing the profitability of portfolio strategies and cost reduction would significantly increase the attractiveness of mutual funds for individual investors.