Abstract
After a sharp decline in the value of mutual funds’ assets in 2008 in subsequent years , their situation has improved. In 2014 it resulted in tripling their assets comparing to 2005. Using monthly data on 18 equity funds operating continuously in Poland in 2005–2014, the profitability, level of risk and efficiency of funds were examined. The results indicate that profitability and efficiency of funds are significantly correlated with the trends in prices on the WSE. Taking higher investment risk brings additional positive results especially during periods of upward trends in share prices. In periods of crisis, smaller losses are suffered by funds with less aggressive investment policy. In the long term, better efficiency is obtained by funds reaching relatively stable rates of return throughout the entire period and better adapting current investment policy to the current stage of economy.
Highlights
Analyzing the dynamic changes of mutual funds’ assets, we can raise the questions if the state of the economy, the level of prices on the Warsaw Stock Exchange (WSE) and the value of the mutual funds’ industry impact the efficiency of investment operations of the equity fund sector in Poland in 2005–2014
The first one was characterized by strong economic growth and an increase of share prices on the WSE, the second fell for the period of the financial crisis and the collapse of the earlier upward economic trends and the third was characterized with stabilization and gradual improvement in the country’s economic and financial situation
The results of the analysis indicate that during periods of dynamic changes in share prices on the WSE, i.e. before (2005–2007) and during the financial crisis (2008–2011), there was a significant stratification in terms of funds profitability (Figure 4)
Summary
Analyzing the dynamic changes of mutual funds’ assets, we can raise the questions if the state of the economy, the level of prices on the WSE and the value of the mutual funds’ industry impact the efficiency of investment operations of the equity fund sector in Poland in 2005–2014. Funds’ efficiency, three periods were identified: the years 2005–2007, 2008–2011 and. The first one was characterized by strong economic growth and an increase of share prices on the WSE, the second fell for the period of the financial crisis and the collapse of the earlier upward economic trends and the third was characterized with stabilization and gradual improvement in the country’s economic and financial situation. The section reviews the literature on assessment of the efficiency of mutual funds, including changes in their performance during the financial crisis. The following presents the research methods used in the funds’ evaluation, the data, results of the research and their discussion
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