This paper considers an international sample of conventional and Islamic mutual funds to assess whether law, culture and political risk affect their compensation fees and expense ratio. The data are hand-collected from many sources. Overall, the results show strongly that legal conditions, culture and political risk have robust differential effects on fees. We find that Islamic mutual funds in countries with higher legal conditions receive lower fees, whereas conventional funds receive higher carried interest, lower fixed management fees and weaker expense ratio. Overall, Hoefsted culture’s measures affect significantly the fees’ structure with robust differential effects on Islamic and conventional funds. Focusing on political risk effects, we show that, in countries with higher political risk, the compensation fees and expense ratio will be higher. The components of country legality and political risk Index have significant differential effects on Islamic and conventional funds’ characteristics.
