SELECTIVITY AND MARKET TIMING ABILITY OF MUTUAL FUND HOUSES IN EMERGING COUNTRIES

Anas Ahmad Bani Atta,Ainulashikin Marzuki

doi:10.32890/ijbf2021.16.1.2

Anas Ahmad Bani Atta, Ainulashikin Marzuki

Open Access

https://doi.org/10.32890/ijbf2021.16.1.2

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Abstract

The paper investigates the selectivity and market timing ability of fund houses in emerging countries. The study uses comprehensive performance models on fund houses from four emerging countries. Data span is from 2007 to 2018. Findings indicate that fund managers benefit from the common facilities provided by the fund houses like market research, diversification and investment opportunity. Fund houses showed good selectivity skills but poor market timing ability. The possible reason is that fund houses manage large and different types of funds. This resulted in more complex management processes and thus reduced the ability to track the fluctuations in the market. The findings are important for investors as they are able to allocate their resources more effectively to funds that are best managed by fund houses while for managers, they are able to position themselves relative to their competing peers.

Highlights

Fund houses act as financial intermediaries offering a variety of mutual funds under their common brand name and via common marketing and distribution channels (Bani Atta & Marzuki, 2019)
A fund house is a group of funds that is managed by an asset management company (AMC) (Iqbal, Aleemi, Zeeshan, & Tariq, 2019)
The results indicate that investment in fund houses earn a Sharpe ratio of 0.39 percent per month, but the Sharpe ratio for both market benchmarks is negative -1.08 and -1.34, respectively

Summary

INTRODUCTION

Fund houses act as financial intermediaries offering a variety of mutual funds under their common brand name and via common marketing and distribution channels (Bani Atta & Marzuki, 2019). The importance of fund house study is evident with increasing reports that provide classification of fund houses in order to create the most effective investment data and research for investors (examples are Morningstar and Barron’s). According to the reports of Morningstar and Barron, it is possible to use the fund house performance to provide investors a ranking of the fund houses. They began reporting on the classification of fund houses using the performance of the fund house (weighted average performance of all funds in the family) to create the most successful investment data and research for investors. That means investors firstly choose the fund house and they choose the funds they will invest in

LITERATURE REVIEW

METHODOLOGY

Market

ANALYSIS OF RESULTS

Findings

CONCLUSION