Abstract
Mutual funds have a significant role as an institutional investor to allocate funds in an efficient way. Therefore, this study examines efficiency of mutual funds due to their substantial role in the growth of economy. Technical Efficiency (TE), Pure Technical Efficiency (PTE), and Scale Efficiency (SE) of mutual funds are examined over the period of 2011 to 2016 by following Data Envelopment Analysis (DEA). The results showed a TE of 70.6%, PTE of 73%, and SE of 96.3% in mutual funds of Pakistan. A significant boost has been noticed in the efficiency of the initial year but it decreased afterward. Decreasing return to scale is found 52.40% whereas, increasing return to scale are found 17.41%. There were only 30.19% mutual funds which are working on right scale. It suggests that regulators need to closely monitor mutual funds since unplanned growth in size of mutual funds will damage the overall efficiency since the decreasing return to scale are
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