“Do Mutual Funds Deliver Alpha”; An assessment of Mutual the Funds Industry in the United Kingdom (UK)

Abstract

The main purpose of this paper is to assess if “Mutual fund can deliver Alpha”. Alpha being the measure of performance in excess to market performance (Alpha = mutual funds return – market return). In assessing the performance of mutual funds in UK, the study employed descriptive research whereby qualitative and quantitative research approaches were used. The study assessed the performance of 50 mutual funds for the period of 19 years from January 2001 to December 2019 using data from Financial Times (FT) all share market index. The result shows mutual funds significantly performed below the market performance. Study recommends investors to use mutual funds as investment vehicles to earn normal return rather than expecting abnormal return and other evaluation metrics measures free from assumption limitations to be used to assess the performance of mutual funds.