Mutual Fund Timing Strategies - Application of Gil Blake's Strategy to Indian Markets

Abstract

In this study, the feasibility of using timing strategy as an investment tool to generate satisfactory return is analysed. For this purpose, the strategies and operating philosophy of Gil Blake has been tested on Indian mutual fund markets. Based on Gil Blakes' model, an automated decision support model has been developed to provide signals for making investment and sale decisions. The model was used to test the effectiveness of timing strategy to generate superior returns on a sample of 56 mutual fund schemes and sector and market indices belonging to different industries. The results indicate that it is feasible to time the market and take appropriate buy and sell decision to improve the returns in relation to the mutual fund schemes, though it is not feasible with all mutual fund schemes. It is noted that, the two key factors that determine the success of this model are: the number of stocks included in the mutual fund scheme and the momentum and swings of the stocks in the mutual fund.