Are equity investments well‐timed? a study of timing parameters of equity mutual funds in India

Abstract

Financial performance of equity mutual funds depends upon the aggregate performance of individual stocks held in the mutual fund portfolio. Rate of return and risk‐adjusted returns are widely used parameters of fund performance. These measures of financial performance, inter‐alia, depend upon the market timing skills of the fund managers. Different studies world over have shown different outcome regarding abilities of the fund managers to produce performance superior to the benchmark portfolio due to their market timing skills. This research paper examines market‐timing skills of the fund managers of diversified equity funds operating in India. An analysis is based on sample of 36 equity mutual funds drawn from 21 asset maangement companies. Secondary data has been used in the study. The period of study is 9 years, 1993‐2002. T‐tests have been performed to assess significance of the timing parameters.