Mutual Fund Performance in Bull and Bear Market: The Case of Pakistani Mutual Fund

“However, there are over 10,000 mutual funds in operation, and these funds vary greatly according to investment objective, size strategy, and style. Mutual funds are available for virtually every investment strategy (e.g. value, growth), every sector (e.g. biotech, internet), and every country and region of the world. So even the process of selecting a fund can be tedious” (Staff).

For the study purpose the daily changes in performance of Mutual funds were analyzed in relation to other Mutual fund company and also to the daily volatility in the National Stock Exchange of India benchmark Index (NIFTY) and national stock exchange and Bombay national exchange

Stock mutual funds consist of open-end funds and closed-end funds. There are different operations between these two funds. Open-end funds are purchased and sold by investors directly, however, investors should purchase and sell closed-end fund via stock market, then stock market trade with closed-end funds. Closed-end funds’ characteristics decide that investors should sell closed-end funds to another investors, once they want to switch funds to liquidity. The price of closed-end funds always meets some aberrant circumstances, which are called closed-end fund puzzles.

Also edited by Greg N. Gregoriou ADVANCES IN RISK MANAGEMENT ASSET ALLOCATION AND INTERNATIONAL INVESTMENTS DIVERSIFICATION AND PORTFOLIO MANAGEMENT OF MUTUAL FUNDS PERFORMANCE OF MUTUAL FUNDS

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When an investor considers to investment money, the first challenge that almost every investor face is numerous options to choose from stocks, bonds, mutual funds & so on. “Equity is one the key asset class which beats inflation in the long run.” (The Times of India, 5th Feb 2015). “Equity mutual funds help investors generate better inflation-adjusted returns, without spending a lot of time and energy on it. While most people consider letting their savings 'grow ' in a bank, they don 't consider that inflation may be nibbling away its value.” (The Hindu, 14th March 2016). Purpose of this study is to analyze the past performance of three global equity mutual funds of State Street Global Advisors (SSGA) & Northern Trust (NT) on the basis of equivalent investment style, asset manager, historical returns & application of statistical tools. This will help in understanding performance of mutual funds in terms of risk & return, asset manager’s investment strategies & asset manager’s performance.

A mutual fund is a collection of diversified investments combined into one fund chosen by the investment company. The mutual fund is classified by what type of funds are included within the fund. When an investor choses to invest in a mutual fund, he or she is adding their money to a pool of other investors money. This money is used to invest in a number of different securities based on specific investment goals. Investment companies choose to include many different stocks, as well as bonds or money market instruments in order to reduce risk and completely diversify the fund (Tyson, 2007). The investor owns shares of the funds rather than owning the underlying investments (Morris & Morris, 2005).

Two funds were chosen in order to determine the performance of each investment by observing the risk and significance of fund management fees. In order to achieve the highest level of accuracy possible, the two funds were chosen in the same sector of the market and of equal size and investment strategy. One fund chosen was an open-ended actively managed mutual fund, and the other a close-ended passively managed exchange traded fund.

Standard deviations are an indicator of market volatility and represent risk. The lower standard deviations, the lower risks of portfolios. Even though the expected market return of active portfolio does not perform well, the risk of active portfolio is minimized. There is no short selling in the active portfolio and the the active portfolio is diversified through balanced investment of these ten stocks. Furthermore, the weights of 10 stocks in the active portfolio are more balanced than the passive portfolio. Therefore, the investors who pursue high expected market return should choose passive portfolio and risk averse investors should choose active portfolio. The investors should consider transaction fees and management fees of active portfolio and investors can insist on choosing active portfolio if they believe they can have higher return that offset these fees.

This study aims to conduct a comprehensive analysis on the performance and risk indicators of two mutual fund managers. After transforming the returns of the mutual funds into the same data-scale with the other variables, we employ a statistically rigorous factor analysis procedure to identify the risk-adjusted performance of each mutual fund. Then, we apply Chow(1960) tests to investigate possible investment strategy similarities and potential structural breakpoints.

To begin, the stock market has been an arena notorious for its extreme wealth creation. In today's news, the small investor is inundated with information regarding particular countries, individual companies, and future macroeconomic predictions in regards to the stock market. With all this information, the small investor is left hopeless to sift through it all, in hopes of finding the particular asset that can secure retirement, pay for a child's education, or provide a stable life. To the small investor's detriment however, many of them do not have the time, expertise or inclination to study individual companies in hopes of determining which one merits his or her hard earned money. Even more important, the few dollars the investor does have to invest must be invested in a manner that does not lose him or her any money. In such instances, the investor must now work even harder to cover any loses incurred and still afford to live comfortably in retirement. As such, the investor forgoes this headache of stock picking and elects to give his money to a mutual fund manager. This action on the surface seems correct,

The sample is taken from the narrow range of closed ended mutual funds and the period used to collect data is from July 2009 to June 2013 and the benchmark that we’ve used is KSE 100 index. Five ratios have been used to analyze the performances of closed ended mutual funds and Rp rate is collected through the website www.mufap.com.pk and the Rf rate is find out through the website www.fumap.com.pk.

Financial markets are constantly becoming more efficient by providing more promising solutions to the investors. Being a part of financial markets although mutual funds industry is responding very fast by understanding the dynamics of investor’s perception towards rewards, still they are continuously following this race in their endeavor to differentiate their products responding to sudden changes in the economy. Thus, it is high time to understand and analyse investor’s perception and expectations, and unveil some extremely valuable information to support financial decision making of mutual funds. Financial markets are becoming more exhaustive with financial products seeking new innovations

Fund performance is measured through several benchmarks models that include the domestic four-factor model, Capital Asset Pricing Model, Jensen’s Alpha model and the Fama-French 3 factor model. These models of calculating the performance of mutual funds considers both domestic and foreign because Hong Kong is host to several foreign mutual fund companies that influence

Our target customers will particularly be the small and medium investors who are unable to avail such services as most of the financial and advisory firms mostly deal with the big ticket investors and thus the small investors have no choice but to invest their assets in passive funds in investment management companies or mutual funds companies which are subjected to index and fund manager’s performance and thus may not bring expected returns. However recent evidence of systematic departures of asset prices in the from equilibrium values, as envisaged under the market efficiency, has renewed interest in ‘active’ fund management and investment advisory services and which entails that optimal selection of stocks, and the timing of