Abstract
The main purpose of this study is to examine the mutual fund industry of Pakistan, to examine the assets allocation pattern of mutual funds, how efficiently they are allocated into various assets categories and how investors base their future investment decisions either on past performance or on the basis of risk, size of fund, and availability of alternative investments. On the basis of results it is noted that on average small and medium investors prefer investments in less risky assets and base their future investment decisions on the basis of past performance whereas big corporate investors calculate risk and make their investment decisions after complete analysis. This study uses panel regression model to test the relationship between past performance and excess returns. The results indicate that fund managers use past performance of a fund as marketing tool to attract investors to invest in a fund which are performing well in recent past. These findings are of immense importance for policy makers as well, to formulate policies which are beneficial for investors and do not allow fund managers to get advantage from investors.
Highlights
Managed Fund is an investment fund run on behalf of an investor by executor; it assumes a fundamental part for allocating idle resources to produce optimal results and reserve funds in the economy and institutional investors
Objectives of the Research The main objective of this research is to analyze the different fragments of Pakistan's managed funds market and to research if there is any significant difference in the way assets are allocated into different asset categories and to examine if the flow of funds is affected by the past performance of the funds in Pakistan
This paper is an attempt to study various segments of managed funds market in Pakistan, and to examine whether there are any significant differences in how assets are allocated into various assets categories
Summary
Managed Fund is an investment fund run on behalf of an investor by executor; it assumes a fundamental part for allocating idle resources to produce optimal results and reserve funds in the economy and institutional investors. In Pakistan Managed funds are asset management companies which for investors put resources into stocks, securities, currency business sector instruments and different securities. Increased number of mutual funds across globe, mostly in advanced nations, is a sign of investor’s preference for low risky investments (Huhmann, 2005). Throughout previous decades, this industry has encountered huge development, while, mutual fund is still in its infancy in developing countries. The development in managed funds market has lead to the formation of different funds of mutual stocks These categories might be ordered in two expansive sections: open and closed-end funds. Close-ended funds, are those funds which are called up at once and subscribed at the start of the fund and they are traded in secondary markets among general public
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