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Equity mutual funds performance in Pakistan: risk & return analysis

Author

Listed:
  • Raza, Syed Ali
  • Raza, Syed Aoun
  • Zia, Abassi

Abstract

The purpose of this study is to find the performance of the Pakistani mutual fund industry. The performance of these funds can be considered to be very good relative to the market portfolio. This research study is focused on Secondary source of data. Analysis apply will require to investigate the related matters of research, which includes the related data of profitability ratios comprising of 12 Asset management companies (AMCs) annual reports in different time period from 1999 to 2009 using yearly returns of the different Mutual Funds. The multiple regression method is used in this paper for the performance of the funds. The results of this research explain that Market Portfolio (MP), Pakistan Investment Bonds (PIBs) are having positive and significant impact on Yearly Return (YR) of different Mutual Funds but dividends (DIV) is having negative and insignificant impact on yearly return of mutual funds, so it is recommended that it is still in early days of mutual funds in Pakistani market. The dividend had always a negative impact on the yearly returns (YR) of mutual funds because the Net Asset Value (NAV) is decreasing after giving dividend at the end of the fiscal year. This study will also add to the body of knowledge as it can be a useful reference to other researchers who are keen to carry out studies on the performance of other types of Mutual Funds in Pakistan.

Suggested Citation

  • Raza, Syed Ali & Raza, Syed Aoun & Zia, Abassi, 2011. "Equity mutual funds performance in Pakistan: risk & return analysis," MPRA Paper 36804, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:36804
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    File URL: https://mpra.ub.uni-muenchen.de/36804/1/MPRA_paper_36804.pdf
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    References listed on IDEAS

    as
    1. Ippolito, Richard A, 1992. "Consumer Reaction to Measures of Poor Quality: Evidence from the Mutual Fund Industry," Journal of Law and Economics, University of Chicago Press, vol. 35(1), pages 45-70, April.
    2. Timo P. Korkeamaki & Thomas I. Smythe, 2004. "Effects of Market Segmentation and Bank Concentration on Mutual Fund Expenses and Returns: Evidence from Finland," European Financial Management, European Financial Management Association, vol. 10(3), pages 413-438.
    3. William F. Sharpe, 1965. "Mutual Fund Performance," The Journal of Business, University of Chicago Press, vol. 39, pages 119-119.
    4. Dahlquist, Magnus & Engström, Stefan & Söderlind, Paul, 2000. "Performance and Characteristics of Swedish Mutual Funds," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 35(03), pages 409-423, September.
    5. Elton, Edwin J, et al, 1993. "Efficiency with Costly Information: A Reinterpretation of Evidence from Managed Portfolios," Review of Financial Studies, Society for Financial Studies, vol. 6(1), pages 1-22.
    6. David R. Gallagher, 2003. "Investment manager characteristics, strategy, top management changes and fund performance," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 43(3), pages 283-309.
    7. Syed ali, Raza & Syed tehseen, jawaid & Imtiaz, arif & Fahim, qazi, 2011. "Validity of capital asset pricing model: evidence from Karachi stock exchange," MPRA Paper 32737, University Library of Munich, Germany.
    8. McLeod, Robert W & Malhotra, D K, 1994. "A Re-examination of the Effect of 12B-1 Plans on Mutual Fund Expense Ratios," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 17(2), pages 231-240, Summer.
    9. Livingston, Miles & O'Neal, Edward S, 1998. "The Cost of Mutual Fund Distribution Fees," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 21(2), pages 205-218, Summer.
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    More about this item

    Keywords

    Yearly Return of Mutual Funds; Dividends; Market Portfolio; Pakistan Investment Bonds; and Net Asset Value;

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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