Asset Pricing Models and Stock Selection Ability of the Indian Mutual Fund Managers: An Empirical Study of Open-ended Growth Equity Schemes

Abstract

The paper is devoted to the study of the analysis and forecasting of the possibility of joint investment Fund managers to choose securities for further investment. The methodological tools of the work are presented by models Jensen, Fama & amp; French and Carhart (which allow to assess the ability to select securities by managers of mutual funds). Empirical estimates of the analysis on three models showed that Indian mutual Fund managers have the ability to choose stocks. The author states that the analysis based on the Jensen model characterizes higher potential opportunities for the selection of securities by the managers of India’s joint-stock funds compared to the other two models used in the study. The results of the study can be useful for investors in making investment decisions, in particular in the process of placing their own financial resources in joint investment funds. The paper postulates that investors will be able to choose joint investment schemes in favor of funds, which provide the opportunity to choose securities for investment for more than ten years. The author notes that the key effect of the introduction of such a practice of interaction between investors and funds will be the growth of investor confidence, which will contribute to the accumulation of additional volumes of investments in the joint investment sector. This study is limited only to the schemes of investing their own financial resources, but in the future can be further expanded to the practice of using a wide range of schemes, since the possibility of choosing shares is associated with many financial processes and indicators. Since the study of asset pricing models is a continuous process, the author proposed to study the processes of joint investment in pension funds in the context of assessing the impact of financial indicators such as liquidity, return on investment, profitability. Keywords: investors, funds of collective investment, the ability to stock selection, patterns of growth equity capital.