MUTUAL FUND

Performance Evaluation of Mutual Fund

ABSTRACT

This paper provides the introduction about the mutual funds, and further this explains the performance of the mutual funds in the portfolio, and this evaluates the overall performance of the mutual funds in the portfolio. This research will help in the future research because as this covers different sort evaluation factors on this basis the performance of the mutual funds can be gauged.

Table Of Contents

ABSTRACTii

CHAPTER 01 INTRODUCTION1

Introduction to Mutual Fund1

Mutual funds and Financial Market3

Relevance and Importance of Mutual funds4

Signifance Of the Research4

Hypotheses5

CHAPTER 02 LITERATURE REVIEW5

Emerging Market and Evolution of Mutual Funds5

Performance Evolution of Mutual Funds7

Measures of Risk in Mutual funds8

CHAPTER 03 RESEARCH METHODOLOGY14

Methodology14

Rationale for a Quantitative Study14

Philosophical Framework or Paradigm15

Research Design15

Literature Search15

Instrument for data collection15

Reliability/Dependability16

Validity16

Ethical Considerations16

CHAPTER 04 DATA ANALYSIS18

Mutual Fund Total Return Formula19

CHAPTER 05 CONCLUSION30

Conclusion30

REFERENCES31

CHAPTER 01 INTRODUCTION

Mutual Funds

Mutual funds have created a considerable interest for investors in the past few years. People have started investing in mutual funds because of the diversification it offers and because the risk adjusted returns are high than other investments. The mutual funds industry of the United States gained a lot in 1993. It showed an increase of 43.3 percent in net assets. The mutual funds industry has been evolving since then and has earned a lot in terms investors as well as profits.

Past Studies

Studies by Sharpe (1966), Treynor (1965) and Jensen (1968) have evaluated the performance of mutual funds on the basis of risk adjusted returns. Various other studies were done, initiated by Herman, Friend, Brown and Vickers (1962). In the past few years, the study has been extended to assess the performance of international funds as compared to the various market indexes. Results of such studies have shown that the international funds generally are unable to outperform the US indexes and are unable to outperform the world indexes.

Walker and Droms (1994) have compared the risk adjusted performance of funds to the international funds. The market indexes used in this study were the S&P 500 and the Morgan Stanley World Index. Eun, Kolodny and Resnick (1991) also conducted the same research using similar performance measures. The number of funds used in these researches ranged from 15 to 30 funds. One drawback of past studies is that they have been unable to compare the international mutual funds returns to another benchmark that is relevant to the investors who invest in US securities only.

The performance of mutual funds has been done on the basis of risk adjusted returns. This has helped in measuring the returns of mutual funds considering the risk involved. Investors have started investing more and more in mutual funds because they think that it is a safe investment.

A well diversified portfolio of mutual funds and a well managed portfolio will earn the highest returns. Management of funds plays a very important role in earning good returns. Studies on the performance of mutual funds show that there is positive relationship between good management and increased returns.

Earning good returns on mutual funds investment depends on the ability ...