Mutual Fund Characteristics and Investment Performance in India

Abstract

In this study, we examine the role of fund characteristics in determining mutual fund performance in India. The data comprises of 237 open-ended Indian equity (growth) schemes during the period April 2007 to March 2013. Using daily dividend adjusted net asset values (NAVs), the risk-adjusted performance is estimated employing conditional version of Carhart (1997) four factor model in a time series regression framework. A range of fund characteristics, namely, the size of fund, growth in size of fund, expense ratio, portfolio turnover, NAV and age of fund, are examined in predictive model in a panel data regression framework that may determine the future performance of the fund. The Hausman specification test is conducted to decide if individual effects are random or fixed. The results of panel regression, based on fixed effects estimator, show that the size of fund, growth in size of fund and NAV negatively affect one period ahead risk-adjusted performance in India, while the age of fund has a positive impact. Expense and portfolio turnover ratios do not play a significant role. Identification of significant fund characteristics offer valuable insights to investors as it will allow them to make prudent selection of mutual funds and make judicious investment decisions.

Analysis of Factors Affecting the Performance of Fixed Income Mutual Funds in Indonesia (Study on RDPT Registered on OJK for the Period 2014-2018)

“…Mutual fund size is a reflection of the size of mutual funds based on managed funds which can be assessed from the amount of Total Net Asset [12]. The greater the TNA should have an impact on the flexibility of mutual fund services such as reducing the burden of dependency costs for its customers [17], and also large funds has better investment opportunities and more resource for research that leading to economic of scale [29]. In addition, according to Sukmaningrum & Mahfud, (2016), a larger size of mutual funds allows mutual funds to diversify their assets, so large size of mutual funds can provide good performance for mutual funds.…”

Performance Evaluation of Banks Sponsored Mutual Funds: An Analytical Study

“…The leading management degree performing better than other selected qualification. Examine the performance of mutual funds by Babbar and Sehgal (2018) using 237 open-ended equity schemes. Panel regression outcome on fixed effect estimator, the size of the fund, its growth and NAV negatively affect in advance one period risk-adjusted performance in India.…”

“…Indian studies have assessed the performance of funds using traditional measures such as Sharpe, Treynor and Jensen measures (Arshdeep, 2011;Alekhya, 2012;Babbar & Sehgal, 2018;Panwar & Madhumati, 2006;Prasad & Prasad, 2012) and above literature reveals that the number of studies executes widely on performance evaluation which discovered various issues in various countries. However, still in an Indian context, performance evaluation of the bank's sponsored mutual fund study is limited and with the time being it needs more systematic revision on portfolio performance and further scope for advanced research (Kar & Shil, 2016;Ananda & Murugaiah, 2006).…”

“…Indian Mutual fund Asset management Industry has grown immensely in size and does attract the academics, financial community and investors to invest in various securities. A mutual fund is the popular resources of Investment (Babbar & Sehgal, 2018). It is managed through the expertise and qualified professionals that pools the savings from various investors and invest in stocks, bonds, money market instruments and other securities.…”

Cheap Syariah Qurban Investment (Csqi) Program: Determining Factors of Potential Participants Decision Making

“…Some research results show rationally that individual investors are more profitable in investing, it makes sense to assume that if individual investors prefer these investments, they are more motivated to take actions that benefit than less profitable investments Cuong and Jian (2014); Luong and Ha (2011);Michael (2011). Identification of significant fund characteristics offer valuable insights to investors as it will allow them to make prudent selection of mutual funds and make judicious investment decisions Babbar and Sehgal (2018). The worst-performing funds are in areas of the market that seem to offer ample opportunities for professional investors due to exacerbated mispricing Gupta-Mukherjee (2014).…”