Fund Size Research Articles

Relationship Between Operational Factors and Cost Efficiency in Defined Contributions Pension Schemes

Pension schemes in Kenya provide income for individuals who attain the retirement age and consequently boost economic growth as well as accelerate domestic savings. The industry is regulated by the Retirement Benefits Authority (RBA). The purpose of the study was to determine the relationship between operational practices on cost efficiency in defined contributions pension schemes in Kenya. The specific objectives were to determine the relationship between service provider costs on cost efficiency in defined contributions pension schemes, to examine the relationship between fund size on cost efficiency in defined contributions pension schemes, to determine the relationship between portfolios mix on cost efficiency in defined contributions pension schemes and to examine the relationship between investment strategy on cost efficiency in defined contributions pension schemes. The study will be significant to the management of defined contributions pension schemes in Kenya and other researchers. The study adopted a descriptive research design. The target population was all the 1,262 pension schemes in Kenya. Stratified random sampling was employed to select small schemes, medium schemes, large schemes and mega pension schemes in Kenya and obtained a total of 304 sample population. The study used secondary data. Descriptive statistics was performed by getting frequencies, means, and standard deviation for the purpose of understanding the results, which was displayed in tables, charts, and graphs. A multiple regression model was fitted to the data and the results revealed that there was a relationship between cost efficiency and service provision expenses, portfolio mix, fund size and investment strategies. Service provision expenses for a pension scheme should be able to cover the cost of administration without unduly compromising the growth of pension savings. Further, while a substantial fund size offered advantages, it should be complemented by strategic acumen and diligent oversight to ensure the scheme delivers on its mandate. A balanced and diversified portfolio is considered a cornerstone providing a buffer against market volatility and therefore enhancing the prospects of sustainable goals and cost efficiency. Finally, the cost associated with portfolio mix and risk management was a necessary investment in securing the long-term sustainability and stability of the pension fund. Recommendation for further studies on cost efficiency of defined benefits schemes should be done as well as further studies on challenges facing pension schemes in Kenya

COVID-19 and redemptions from Irish-resident bond funds

This paper examines net redemptions from bond funds domiciled in Ireland at the onset of the COVID-19 pandemic. We analyse various empirical specifications to determine whether factors such as fund leverage, measures of liquidity, portfolio risk and portfolio concentration, among others, explain outflows from Irish-domiciled bond funds in March 2020. The findings indicate that funds with a larger share of short-term securities and riskier bond portfolios experienced higher redemptions. Our analysis also suggests that fund size and age are significant factors affecting outflows. When examining various sub-samples, we find evidence of more reactive behaviour among investors in actively managed funds compared to passively managed funds. We also find that retail bond funds demonstrate greater sensitivity to risk and leverage, while professional funds show evidence of lower risk aversion. These results provide insights that can help inform policymakers’ view of regulatory tools for market-based finance, a key priority internationally.

Taking matters into their own hands: How Investors' stock preferences affect mutual fund flows in China

We examine the impact of investors' stock preferences in mutual funds' portfolios on fund flows in China. Our results indicate that mutual funds with an investment style consistent with individual investors' stock preferences have higher fund flow. We find that it affects only individual investors' fund flow, not institutional investors' fund flow. This impact is greater during periods of low economic policy uncertainty or high investor sentiment. Moreover, this impact is reduced with larger fund size or longer fund age. The reasonable explanation is that investors infer fund managers' skills by analyzing the stocks in the fund's portfolio. This explanation is further validated by the results using index funds as the control group. Our findings challenge the assumption that mutual fund investors fully delegate decisions to professionals. Further analysis reveals there is no significant correlation between these preferences and future returns. Our findings contribute to the study of mutual fund investor behavior from a fresh perspective.

Scale diseconomies and capacity in fund management: variation across equity markets

PurposeWe model the relation between excess returns, fund size and industry size for active equity funds.Design/methodology/approachWe study and contrast four markets – global equities, emerging markets, Australia core and Australia small caps – and use the results to investigate the extent to which funds deviate from estimated capacity.FindingsWe uncover a significantly negative relation between returns and both fund size and industry size across all markets. The estimated percentage of funds operating above versus below capacity varies both across markets and over time, as does the role played by fund size versus industry size. We find a greater prevalence of funds operating significantly below than above capacity, in contrast to findings for US equity mutual funds. Significant deviations from estimated capacity persist for a median of between two and six quarters.Originality/valueOur main contribution is to show that the dynamics governing deviations from capacity for active equity funds vary across markets.

Mutual fund investment performance: Indonesia Sharia stock index as characteristics moderating model

Purpose – This study investigates how the Sharia stock price index influences the relationship between various factors, such as the expense ratio, portfolio turnover ratio, cash ratio, age, size, and characteristics of Sharia mutual funds, and their overall performance. Methodology – This study employed a quantitative descriptive research method to analyze 316 populations. Purposive sampling was used to obtain a total of 51 samples. We used research tools for data collection and SMART PLS 4 statistical software to analyze the collected data. Findings – The characteristics of ISSI-moderated mutual funds have a significant positive effect on the performance of Sharia mutual funds. To achieve better performance, investment managers must incur high costs in implementing active strategies. The more active the investment manager is in trading by looking at existing opportunities, the better the performance of the Sharia Mutual Funds. Implications – The implications of this research indicate that the movement of the Sharia stock price index can strengthen the positive causal relationship between several characteristics of Sharia mutual funds. The effects of Sharia mutual fund portfolio instruments, including shares, bonds, and deposits from the Sharia banking industry, also contribute to improving the performance of Sharia mutual funds in Indonesia.Originality – This study investigates the moderating role of the Sharia stock price index on several characteristics of Sharia mutual funds, including the expense ratio, portfolio turnover ratio, cash ratio, age of the mutual funds, and size of the mutual funds, in relation to their performance.

Financing and Farm-Gate Pricing Strategies for Agricultural Cooperatives With Cash-Constrained Farmers

Equity investment in agricultural cooperatives (co-ops) is typically limited to farmer-members; yet farmers are usually cash-constrained. In addition to the common stock that is held by farmer-members, many co-ops are changing their financial structure by raising equity from external investors. This helps co-ops to collect capital, but also brings to the fore the conflicting benefits of farmers and external investors. In this paper, we develop a two-stage game-theoretic model to examine a start-up co-op’s farm-gate pricing and financing strategies, considering two types of external fund: preferred stock that bears a fixed return rate and outside stock that shares the net profit (in proportion to equity) with common stock. We characterize the co-op’s strategies in different scenarios and generate the following insights. First, while both types of external equity outperform the case with common stock only, the preferred stock generally outperforms outside stock due to its lower financial cost, higher tolerance for fund size limits, and flexibility in setting farm-gate prices. However, outside stock can outperform preferred stock if it allows a higher fund size limit. Second, the co-op’s financial strategy exhibits a similar structure in equilibrium regardless of whether it is preferred stock or outside stock, despite their distinct financial terms. Finally, farm-gate pricing has a unique role in co-ops affecting the returns to farmers and external investors, which also highlights the conflicting roles of farmers as both patrons and investors when external equity is used.

Mutual fund partial liquidation and future performance

AbstractWe examine the determinants of mutual fund partial liquidation and the effect of a negative shock to fund size on performance. We find that older funds from a smaller family with a large number of share classes are more likely to conduct partial liquidation. As fund size decreases after partial liquidation, its performance improves. This effect is more pronounced for funds with stronger pre‐event liquidity constraint and funds that subsequently experience a larger decrease in liquidity, suggesting that liquidity constraint is a contributing factor of fund performance. These findings are consistent with mutual funds having decreasing returns to scale.

Impact of a new regulatory policy on thematic and monthly distribution funds in Japan

The Japan Financial Services Agency (JFSA), the country’s financial regulatory body, is concerned with business conduct surrounding mutual fund sales in Japan, especially regarding thematic and monthly distribution funds. The agency introduced a new regulatory policy in 2015 to encourage competition to provide high-quality, customer-oriented financial products and services. Unlike traditional regulation, this policy is based on the comply-or-explain approach, which does not mandate compliance. We utilize a difference-in-differences (DID) approach to examine whether this policy induces changes in the behavior of fund distributors regarding the promotion of these funds. We find that the effectiveness of the policy is not uniform. The policy has a limited impact on reducing fund flows and the size of thematic and monthly distribution funds among active funds, which include equity, bond, and balanced funds. By contrast, we find some evidence that the policy has reduced the fund flows and the size of equity thematic and monthly distribution funds relative to low-cost equity index funds. We find that the comply-or-explain approach alone may not suffice to regulate these fund sales, as distributors and managers can pursue their own interests. In addition, the effectiveness of the approach also depends on investors’ behavior, which may be hindered by a lack of sophistication in understanding the characteristics of these funds.

Impact of Fund Size on Performance and Risk of Closed-End Mutual Funds: An Empirical Analysis in the Context of Bangladesh

Impact of Fund Size on Performance and Risk of Closed-End Mutual Funds: An Empirical Analysis in the Context of Bangladesh

Convergence in Financial Development and Growth

We evaluate the cross-country convergence of financial development and its relationship with GDP growth. Financial inclusion variables have been widely converged across countries, and the catch-up effect of countries with poor financial coverage mainly drives the convergence. In contrast, financial development measures — including domestic credit, liability, mutual fund size, and stock market capitalization — have diverged since 1985 despite the absolute convergence in GDP and financial inclusion. The GDP growth rates strongly correlate with the change in financial development but not the improvement in financial inclusion.

Crowding of international mutual funds

We study the relationship between crowding and performance in the active mutual fund industry. Using the equity holdings overlap of 17,364 global funds, we find that funds that crowd into the same stocks underperform passive benchmark funds by 1.4% per year. The negative returns to crowding can at least in part be explained by excess demand for liquidity and the associated discount for holding liquid stocks. We show that our measure of crowding contains novel information about performance that is not reflected in other variables that describe funds’ investment environment, such as fund size and style. Our findings suggest that crowding of investment opportunities is important for understanding diminishing returns.

Труд и капитал как факторы формирования прибыли в современной России

This work is devoted to an attempt to quantitatively assess the influence of traditional and human capital, embodied in labor, on the profit of enterprises in the economy of modern Russia. To assess the impact of human capital on profit, data on the monthly wage fund in the regions of the country was used, which was considered as an indicator of the cost of human capital. Based on Rosstat data on the profits of regional enterprises, data on the average monthly wage of employees of organizations, the number of employed workers in the regions, data on the value of fixed assets of enterprises for 2010, 2015, 2019, 2020 and 2021, linear regression models were obtained. The models showed the dependence of the profits of regional enterprises on the size of the average monthly wage fund in the regions and on the value of fixed assets. The characteristics of the resulting models indicate that the wage fund and the cost of fixed assets have a significant and equal impact on the profits of enterprises. The equivalence of the influence of capital and human capital on profit assumes that the equilibrium is an equal distribution of income between labor and capital. income distribution. Currently, in the economy, the distribution of income is not in equilibrium, since capital income predominates.

Liquidity provision and trading skill: Evidence from mutual funds' daily transactions

AbstractExamining risk‐adjusted returns for executed trades over horizons of up to 1 year, we document strong evidence of short‐term trading skill using daily mutual fund transactions from Finland. We find that trading performance is highly persistent up to the 1 month horizon, with an annualized Carhart abnormal return of 5.03% observed for both buys and sells. Moreover, the returns observed for the first week account for almost 36% of a fund's 1 year trade return, underscoring the significance of short‐term trading in mutual funds. For the best‐performing funds, this short‐term performance also translates into sustained long‐term outperformance. Investigating possible sources, we find that liquidity provision, rather than price pressure, is a significant contributor. In addition, short‐term trading performance is significantly positively related to trade size, fund size, and expenses, depending on whether buys or sells are considered.

패널 고정효과모형을 활용한 사회맞춤형 산학협력 선도대학(LINC+) 사업의 효과성 분석

This study used a panel fixed-effects model to analyze the effectiveness of the LINC+ project, focusing on key industry-academia-related education-related performance indicators and industry-academia cooperation outcome indicators. Through this, the purpose is to derive policy implications for the effective promotion of local government-centered industry-academia-research cooperation projects after the RISE transition. The panel fixed effects model analysis to analyze the effectiveness of the LINC+ project was analyzed by analyzing the treatment effect according to participation in the LINC+ project and the treatment intensity effect according to the size of the project cost, and was further analyzed by controlling the annual trend line and university characteristics. . In this model, the treatment effect analysis model is a model that verifies the performance between participating and non-participating universities by inserting a dummy variable for project participation, and the treatment intensity effect analysis model is a model that takes the logarithm of the support amount for each university and inputs it to participate in the project. This is a model that confirms the effectiveness of projects depending on the size of inter-university support funds. As a result of analyzing the effectiveness of the project between participating and non-participating universities through a panel fixed effects model, the performance indicators that have a static effect on project participation and project costs are the ratio of students completing capstone design and technology transfer per full-time faculty member. It appeared as an import fee. On the other hand, performance indicators that had a negative effect on project participation and project expenses were domestic research performance, employment rate, and proportion of students completing 4 weeks of field training. Based on the above analysis results, future RISE plans to continuously improve and advance the performance of industry-academia-research cooperation are as follows. First, there is a need to encourage problem-solving, industry-academia-linked curriculum such as Capstone Design to be actively reflected in the RISE project in the future. Second, each local government needs to prepare support measures to increase technology transfer fees, which is a representative result of value creation through industry-academia cooperation under RISE. Third, institutional support should be strengthened so that local governments, local companies, and local universities can discover various field training institutions through close collaboration and receive substantial field training for more than 12 weeks. Lastly, for a more rigorous analysis of the employment rate of the LINC+ project, it is necessary to analyze the effectiveness of the project only for departments participating in the LINC+ project.

A Note on the Impact of the Canada-India Diplomatic Standoff on the Performance of Canadian Mutual Funds Investments in India

On June 18, 2023, Mr. Hardeep Singh Nijjar, a Canadian citizen of Indian origin, was killed in Canada. On September 18, 2023, the Canadian Prime Minister, Mr. Justin Trudeau, accused the Indian Government of involvement in killing Mr. Nijjar in the Canadian Parliament. This accusation preceded and succeeded by other events, led to a significant diplomatic standoff that is still ongoing. We examine the impact of this event chain on the performance of daily returns of mutual funds based in Canada that are predominantly invested in Indian securities. Our results, controlled for general stock market returns, fund size, expense ratio, and interest rates, indicate that the events negatively impacted fund performance. Our study adds to the existing literature on the benefits of international diversification of mutual funds in disconnected markets. The findings of this paper suggest that political discord between two distinct and unrelated economies may impact profits and negate the advantages of international diversification. Our study is significant to professionals, particularly mutual fund managers, as it demonstrates the role of two countries’ political ties in affecting mutual fund returns.

PENGARUH DANA PIHAK KETIGA PERBANKAN SYARIAH TERHADAP PERTUMBUHAN EKONOMI DI INDONESIA: A Theoritical Approach

Economic growth is an important determinant of individual income levels and the growth rate of a particular region, measured through GDP. The NPF ratio serves as a metric to assess credit quality or the bank's competence in managing credit risk. DPK includes funds obtained from the public in the form of investment products. The methods used in this article include a qualitative approach involving a literature study or library-based research. The purpose of this investigation involves analyzing the prevailing theories through a comparative examination of the literature pertaining to the research results. The literature used in this study includes research findings and reviews derived from nationally recognized scholarly articles in accordance with financial management. All articles used in this study were sourced from the electronic data search engines ResearchGate and Google Scholar. Through the analysis of the determinants of Islamic banking (NPF and DPK), a significant correlation was identified. The impact of NPF on economic growth manifests in its capacity to increase borrowers' ability to repay loans, while simultaneously incurring an escalation of loan risk. Similarly, the effect of Third Party Funds on economic growth is illustrated by the important role that economic growth plays in the capitalization of Islamic banks, consequently exerting a major influence on the size of third party funds attracted by Islamic banks. Based on the aforementioned findings, it is highly recommended that researchers proceed to conduct a comprehensive literature review to explore additional independent variables (such as Return on Assets and Capital Adequacy Ratio) that impact economic growth during the Covid-19 pandemic.

Islamic, ethical and conventional mutual funds: a comparative study (1990–2022)

Purpose This study aims to test mutual fund superiority, comparing the performance of 646 Islamic mutual funds with 475 ethical funds and conventional proxies. Design/methodology/approach This study uses statistical methods including paired t-statistics of independent samples, one-way Bonferroni test–analysis of variance–F-statistic for testing means equality, the chi-squared test for median equality and regression models corrected for heteroscedasticity. These methods are used to identify superiority of mutual funds and to validate the significance of the results. Findings The findings confirm the superiority of conventional funds over ethical funds and ethical funds over Islamic funds. Both ethical and Islamic funds, however, outperform conventional proxies during some recessionary periods. Moreover, stronger performance is recorded for Islamic funds in Europe and North America regions and across age and asset allocation categories, but limited support for reversal fund size, composition focus and reversed price effect. Research limitations/implications These findings should assist investors when deciding to invest and motivate Islamic and ethical funds to improve their portfolio formation and asset allocation strategies set by their professional managers. Originality/value The originality of this study is in its comprehensive approach in that it compares the performance of funds after accounting for such characteristics as fund objectives, size, age, asset allocation, geographical investment focus, fund composition focus, share price levels and the effect of global crises. This study approach is not only original and productive in documenting Islamic funds’ performance for the past three decades (1990–2022) but can also update the literature on these characteristics collectively and individually.

The cumulative prospect theory and fund flows in emerging markets

ABSTRACT This study is the first to examine the efficacy of the Cumulative Prospect Theory value of the past return (CPTV) to explain fund flow in emerging markets funds by considering the impact of fund managers’ characteristics and behavioural biases on fund investors’ investment decisions. Besides, this study also investigates the impact of fund investors’ ability to identify fund managers’ skills. The findings suggest that CPTV has a significant and positive association with subsequent fund flow and emerging market funds’ performance. Notably, the study documents a negative relationship between fund flow and fund size and also highlights that newer funds generate greater fund flows. Furthermore, the findings indicate that investors investing in emerging market funds tend to behave differently, allocate money for alpha, and avoid giving distorted income for factor-related returns to fund managers. The results demonstrate that managers’ skill and portfolio concentration decision affects fund flow and CPTV relationships. The findings illustrate that fund managers who concentrate their portfolio and invest in high CPTV stocks tend to generate higher fund flow than their diversified counterparts.

Comparative Analysis of Private and Public Mutual Funds: A Performance Evaluation

Abstract: The mutual fund industry is a popular investment avenue that offers investors the opportunity to invest in a diversified portfolio of securities. The industry has witnessed significant growth in recent years, with investors seeking to maximize their returns and reduce risk. This paper presents a comprehensive comparative analysis of private and public mutual funds in terms of their performance. The study aims to evaluate the risk-adjusted returns, expense ratios, fund size, asset allocation, and other relevant factors of both private and public mutual funds to determine which type of fund offers better performance. To conduct the analysis, a sample of four private and four public mutual funds was randomly selected, and their performance was evaluated using various performance metrics such as Sharpe ratio, Treynor ratio, and Jensen's alpha. The data was analyzed using statistical tools such as U test, t-test, and regression analysis. The study found that private sector mutual funds performed comparatively better than public sector mutual funds in terms of risk-adjusted returns, expense ratios, and asset allocation. Private sector mutual funds had higher Sharpe ratios and Treynor ratios compared to public sector mutual funds, indicating that they generated higher returns per unit of risk taken. Private sector mutual funds also had lower expense ratios, indicating that they charged lower fees to investors. In terms of asset allocation, private sector mutual funds had a higher allocation towards equity securities compared to public sector mutual funds, which had a higher allocation towards debt securities. The study also identified significant differences in the investment strategies, portfolio management, and investor base of private and public mutual funds. Private sector mutual funds had a more aggressive investment strategy, with a higher allocation towards equity securities, whereas public sector mutual funds had a more conservative investment strategy, with a higher allocation towards debt securities. Private sector mutual funds were also found to be more actively managed compared to public sector mutual funds. Private sector mutual funds had a higher percentage of assets under management from retail investors, while public sector mutual funds had a higher percentage of assets under management from institutional investors. The study provides valuable insights to investors, fund managers, and policymakers regarding the performance of private and public mutual funds. The findings suggest that investors may benefit from investing in private sector mutual funds due to their higher risk-adjusted returns, lower expense ratios, and higher allocation towards equity securities. Fund managers may also benefit from the study by gaining insights into the investment strategies and portfolio management practices of private and public mutual funds. Policymakers may use the study to design policies that promote the growth and development of the mutual fund industry. Overall, this study contributes to the existing literature on mutual funds by providing a comprehensive comparative analysis of private and public mutual funds in terms of their performance. The study adds to our understanding of the factors that affect the performance of mutual funds and provides insights into the investment strategies and portfolio management practices of private and public mutual funds.

Determinants of Net Asset Value of Sharia Equity Mutual Funds in Indonesia

This research aims to analyze the influence of the BI 7 days repo rate, inflation, exchange rate, JKSE, mutual fund size, stock selection skill and market timing ability on the net asset value of sharia equity mutual funds in Indonesia. The research was divided into 3 period results, namely overall (2017-2022), before the Covid-19 pandemic (2017-2019), and during the Covid-19 pandemic (2020-2022). Data processing uses Eviews 12. The method used is the Random Effect Model (REM) with the analysis model using Generalized Least Square (GLS). The results of this research state that over all the BI 7 days repo rate has a significant positive effect, however in the period before the pandemic the effect was significantly negative, whereas during the pandemic there was no effect. Inflation in whole period and when a pandemic has no effect, but in the period before the pandemic it has a significant positive effect. The exchange rate in whole period has a significantly negative effect, but in the period before the pandemic it has a significantly positive effect, whereas during the pandemic it has no effect. The JKSE in whole period has no effect, but in the period before and during the pandemic it had a significant positive influence. Mutual fund size in whole period and during the pandemic has a significant positive effect, but in the period before the pandemic it has no effect, stock selection skill in whole period, in the period before and during the pandemic has a significant positive effect. market timing ability in whole period, in the period before and during the pandemic had a significant positive effect. Differences in results in a period are due to changes in economic conditions in Indonesia.