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Efficiency and investment style of European mutual funds

Author

Listed:
  • Marta Vidal

    (Universidad Europea de Madrid)

  • Laura Molero González

    (University of Almería)

  • Juan E. Trinidad-Segovia

    (University of Almería)

  • Javier Vidal-García

    (Complutense University of Madrid)

Abstract

In this paper, we use Data Envelopment Analysis (DEA) to examine the efficiency of European mutual funds across different investment styles. The DEA methodology goes beyond conventional efficiency to identify the most efficient mutual funds compared to the rest of the sample. Due to its flexibility including inputs and outputs (without a previously established relationship) and the lack of need for a hypothesis about the production function, the DEA allows for building efficient frontiers using the information collected from each fund. The application of the DEA in the sample of European mutual funds has served to show potential investors its usefulness and effectiveness in terms of fund selection. The results obtained in this study allow the identification of mutual funds with the most significant profitability potential and those with lower expectations of profitability.

Suggested Citation

  • Marta Vidal & Laura Molero González & Juan E. Trinidad-Segovia & Javier Vidal-García, 2025. "Efficiency and investment style of European mutual funds," Economics Bulletin, AccessEcon, vol. 45(1), pages 623-637.
    • Handle: RePEc:ebl:ecbull:eb-24-00413
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    More about this item

    Keywords

    Mutual Funds; Efficiency; Factor Models; Data Envelopment Analysis.;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services

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