Unit Trust Research Articles

Comparative Performance Analysis of Public Sector Sponsored and Private Sector Sponsored Mutual Funds in India

The concept of mutual funds in India dates back to the year 1963. The era between 1963 and 1987 marked the existence of only one mutual fund Company in India, namely the Unit Trust of India (UTI), with Rs. 67 billion assets under management (AUM). Few other mutual fund companies entered the mutual fund market later on. The private sector funds started penetrating the fund families during 1993. Kothari Pioneer was the first private sector mutual fund company in India which has now merged with Franklin Templeton. By the end of 1993, the total AUM of the industry was Rs. 470. 04 billion. Just after ten years with private sector penetration, the total assets rose up to Rs. 1218. 05 billion and till 2004, it reached the height of 1540 billion. The total AUM of the mutual fund industry has risen up to 14000 billion in April, 2016. Today there are 43 mutual funds in India offering a number of schemes suited to the needs of different type of customers. It has been noticed that the private sector mutual funds have been taking more risks and have also been able to gain higher returns on an average. This paper tries to highlight the comparative performance of public and private sector mutual funds and also throw light on the scope of the existing potential of the fund market in the face of traditional risk aversion of the investors and huge rise in financial assets.

REIT Unit Investment Trusts and Fund Manager Skill

This study examines fund manager skill using a sample of Real Estate Investment Trust Unit Investment Trusts (REIT UITs). It also investigates how REIT UIT performance compares to investing in REIT mutual funds. Are REIT UIT fund managers able to select REITs that deliver superior performance? Using a hand-collected sample of REIT UITs from May 2009 to July 2015, this study finds that REIT UITs do not deliver statistically significant positive alpha. This result is consistent with the Comer and Rodriguez (2015) finding for a sample of diversified UITs, but counter to the Cici et al. (2011) finding of positive alpha for REIT mutual fund managers. This is the first paper to investigate fund manager stock selection skill in REIT UITs.

Mutual funds - growth in India, market risks and importance as an investment product.

The mutual fund industry has grown satisfactorily over the past decade. From the days when it was felt that a savings oriented institution like the unit trust of India needs to be established in the early 1960’s, the industry has grown enormously in the past decade. In fact, the entire nature of the industry has completely not only in quantitative aspects. The mutual fund industry now offers a very wide range of choices for investment to the potential investors. The whole paper is divided into three sections. In the first part, we have discussed the origin and growth of mutual fund in India. In the next section, we have focused on the types ofrisks in mutual fund. In the third section, we have analysed the importance of mutual fund as an investment product.

Performance evaluation of actively managed mutual funds

Motivated by the growing attraction of the mutual fund industry worldwide, this research seeks to explore the economic benefits contributed by the South African equity unit trust managers over the period from 6 January 2002 to 2 September 2012. The performance statistics of selected equity unit trusts are examined for the overall examination period and two sub-periods: 6 January 2002 to 6 May 2007 and 7 May 2007 to 2 September 2012. The first sub-period captures the bullish performance of the unit trusts before the 2008 global financial crisis. The second sub-period captures the global financial crisis and the European debt crisis before the European Central Bank (ECB) subsequently implemented the outright monetary transactions (OMT) to curb the yields in Eurozone. The risk-adjusted performance measures employed by this study include the Sharpe ratio, M-squared, Treynor measure and Jensen’s alpha. Regardless of the different applications of risk-return parameters employed to evaluate fund performance, the results reveal that, on average, most of the equity unit trust managers in South Africa do not outperform the market proxy on a consistent basis. The majority of the unit trust managers show good performance before the crisis, with subsequent inferiority in performance in turbulent times. Keywords: unit trusts, active portfolio management, passive portfolio management, performance evaluation, efficient market hypothesis (EMH). JEL Classification: G11, G12, G14, G15

Best Choice for Investment-Islamic Equity or Sukuk?

Islamic capital market is an important part in the development of Islamic economics especially in providing a mobilization of fund to the efficient economic source and provides liquidity to the Islamic finance institution such as Islamic bank etc. There are two main instrumens in Islamic capital market namely Islamic equity and sukuk. In investmet point of view, the raise question is what is the best choises of investment between islamic equity and sukuk. The objective of this research to describe the return and the risk profile of Islamic equity and sukuk in the world. Second, this paper will conduct study about the chance to arrange Islamic portfolio investment consist of two securities namely, sukuk and Islamic equity. To analyze this, researchers will use some tools in capital market theories including portfolio theory, minimum variance portfolio, Sharpe, Jansen, Treynor and RAP model. Thirdly, this paper will test the different level of return between Islamic equity and sukuk. The main instrument is statistical analysis, and SPSS. This research found that based on quantitative analysis Sukuk provides a better return as well as lower risk. However, in the short term, islamic equity is often provide a higher return than sukuk. From the several measurement tools, this research also finds that sukuk has a better performance than islamic equity. In contrast, statistical testing shows that there are no significance differences return between Islamic equity and sukuk from 2005 till 2010. Therefore, this research suggest that investor/peple who want to increase their wealth and prefer to invest in islamic capital market, they should make a islamic portfolio include some securities component, sukuk, islamic equity, islamic unit trust, islamic etf, etc.

How disruptive can Smart Beta be to the South African Active Fund Management Fraternity?

ABSTRACTThis research paper explores the theme of Smart Beta and the current state of inefficiency of active fund fee structures in South African domestic equity unit trusts. The emerging understanding is that many of the latent sources of value-add (or alpha) of active fund managers are currently accessible in cheaper form via Smart Beta products. Smart Beta products use mechanical and automated rules to establish exposures to tradeable instruments that emulate many of the understood and replicable themes in current active asset management. We sample 91 well-known general equity funds along with nine local Smart Beta funds and demonstrate how disruptive Smart Beta products could be to the fee structures of many of these active funds. We do this by mapping the reproducible elements of the active return of these funds to fungible Smart Beta factors. We conclude with five broad predictions around the active fund management industry in South Africa. Additionally, we focus on how active managers might prudently align themselves with an understanding of what aspects of their value-add are not replicable in order to persist and thrive.

Be Wary Investors: Foremost Factors in Asset Performance in East Africa: A Case of Collective Investment Schemes in Kenya

Alternative investment schemes are one of financial intermediaries through which funds are pooled<br />together for the purpose of investment in various financial assets which are normally managed by<br />professional managers. One such avenue in Kenya is investing through a unit trust fund. It is therefore<br />important for an investor utilizing one of these managers to evaluate how well the fund has done relative<br />to other funds and that of the benchmark. However, these performances were affected by numerous<br />factors. It was on the above footing that the research is focused on evaluating the importance of key<br />factors that affect its performance. The research employed descriptive research design mainly cross<br />sectional and longitudinal research to achieve the objectives. The target population was all the eleven<br />unit trust funds in Kenya. The study used both primary and secondary data. As a source of primary data,<br />structured questionnaires and scheduled interview were used. The key factors were analyzed using factor<br />analysis and multiple regressions to establish the importance of these factors in determining funds’<br />performance. The finding was that the factors that affect performance of funds in Kenya were classified<br />into five categories namely foreign investment participation, online trading, experience, age and equity<br />risk. The main factors affecting equity funds performance were experience, age and online trading only<br />while none of these factors were significant in influencing the blended funds’ performance. The<br />prospective investors must therefore be mindful about these factors while weighing their investment<br />proposals.

The Winner Takes it All: Outperformance Drives Subsequent Flows in South African Unit Trust Funds

The relationship between unit trust (mutual funds) performance and subsequent investment flows into and out of funds has been, for decades, the focus of many international studies. This study builds on the prior findings of the flow-performance relationship and aims to quantify the inflow into funds which outperform. The flow-performance relationship is important for investment businesses to understand, because of the implications this has on the profitability of a fund. The research applies a portfolio time-series methodology to Morningstar SA data and a buy-and-hold analysis. Two unit trust categories are tested, namely General Equity and Multi-asset High Equity funds, and within each category, single manager funds and fund of funds are tested separately. Funds are ranked according to their past performance over a 14-month period, and assigned into quintiles. Net flows into each fund in the subsequent quarter are then determined, and the process repeated on a quarterly basis. We find strong evidence that equity funds need to perform in the top quintile to attract funds, and note that relative performance to peers is more important to investors than performance relative to other benchmarks.

The Impact of Trust and Company Law on Institutional Investors and Combined Codees Expectation

The nature of investments and investors has changed with the passage of time. The institutional investors participate or monitor the corporate activities by direct and indirect methods. The aim of investment is to minimise the investment risks through diversification of holdings. The general principles of law of trust are also applicable to the unit trust and pension funds for specific purposes. The occupational pension’s scheme is normally established or organised as a trust. It is presumed that the unit trust is merely an extension of the private trust into the corporate sector. Historically, there are four themes relating to the perception of unit trust and company. The expression of ‘mutual funds’ is familiar in American Continent. The courts of common law jurisdiction are lenient to apply the principles of company to resolve the issues relating to unit trusts. The unit trust and investment trust are different to their constitution and expression.

Do UK Retail Investors Buy at the Top and Sell at the Bottom?

In this paper we examine market level data on the net investment into broad categories of UK mutual funds (known as unit trusts) collated by the Investment Management Association (IMA). We use these data to calculate a measure known as the 'performance gap' that is used by both Friesen and Sapp (2007) and by Dichev and Yu (2009). Our data spans the period from 1992 to the end of 2009 and therefore represents a significant sample period over which to study this phenomenon. Our results are broadly in keeping with those of previous research in this area, which has been achieved using US mutual fund data. The UK data that we use here suggest that on average the investment timing decisions of retail investors with regard to equity mutual funds has cost them performance of just under 1.2% per year over the eighteen year period of our study.

Are the ASISA Standards with Respect to Unit Trust Classification Representative of Homogeneous Risk Classes?

We examine the information content of South African (SA) equity unit trusts to investigate whether risk is heterogeneous between investment objective groups and homogeneous within groups because those characteristics are vital to proper investment decision making. We find risk differences within SA equity groups especially in the Equity-General and Equity-Growth. However, in the other categories, the systematic risk differences depended on the choice of benchmark. Those risk differences may have significant implications for investors. Examination of between-group risk revealed that not all the equity categories were heterogeneous. We also find that the choice of benchmark is critical when measuring and comparing performance characteristics of funds.

Quantifying right ventricular diffuse fibrosis in tetralogy of Fallot - a novel customised approach for the challenges of the right ventricle

NIHR Cardiovascular Biomedical Research Unit, Royal Brompton & Harefield NHS Foundation Trust and Imperial College London, London, UK Full list of author information is available at the end of the article Figure 1 Representative short-axis images from subjects scanned for RV T1 mapping by fat-water separated, MSPrep dark blood imaging. Images for five subjects with repaired tetralogy of Fallot and five healthy volunteers shown (one subject per column): Top row MoCo averaged water-only image at Ts 600 ms, Second row MoCo averaged water-only anchor image at same window/level, Third row MoCo averaged fat only image, Bottom row T1 map generated from registration and 2-parameter fit of the six images per sampling scheme. Heng et al. Journal of Cardiovascular Magnetic Resonance 2016, 18(Suppl 1):O26 http://www.jcmr-online.com/content/18/S1/O26

‘Manufacturing Capitalists’: The Wider Share Ownership Council and the Problem of ‘Popular Capitalism’, 1958–92

‘Manufacturing Capitalists’: The Wider Share Ownership Council and the Problem of ‘Popular Capitalism’, 1958–92

A Comparative Study of the Mutual Fund Schemes of Reliance and Unit Trust of India

The mutual fund industry has experienced phenomenal growth in the past two decades. The increase in the number of schemes with increased mobilisation of funds in the past few years shows the importance of the Indian mutual funds industry. Proper assessment of various fund performance and their comparison with other funds helps retail investors for making investment decisions. Among various financial products, mutual fund ensures the minimum risks and maximum returns to the investors. The development of various mutual funds products has proven to be one of the most catalytic instruments in generating momentous investment growth in the Indian capital market. In this context, close monitoring and evaluation of mutual funds have become essential. Therefore, choosing profitable mutual funds for investment is a very important issue. The main objectives of this research work are to analyse the financial performance of select mutual fund schemes of reliance and UTI through the statistical parameters such as alpha, beta, standard deviation, r-squared, Sharpe ratio. The findings of this research study will be helpful to investors for their future investment decisions.

The Performance of Unit Trust Industry in Malaysia

This study measured the efficiency of fixed income unit trust funds and equity unit trust funds for the period of January 2004 to December 2014. A total of 36 fixed income funds and 109 equity funds were evaluated using stochastic frontier analysis (SFA) technique with three inputs (expense ratio, portfolio turnover ratio, and fund management stated fee) and one output variable (return). The econometric technique was used to measure the portfolio efficiency score as well as to compare the efficiency of fixed income funds and equity funds. The results indicated that the average efficiency score for equity unit trust funds was higher than fixed income unit trust funds. Nevertheless, when the samples were categorized into panel data, the average efficiency score for fixed income funds increased throughout ten years. Meanwhile the average score for equity funds was consistent over the years. It shows that time is invariant for equity funds. However, this means that the performance efficiency for both types of funds was considered excellent and efficient. The results indicate that the mean efficiency achieved in unit trust industry is almost 100% of its potential output.

English

The global survey of Real Estate Investment Trusts (REITs) has indicated a high performance nature of REIT as an investment vehicle for the real estate sector. Studies have been conducted across the REIT markets of America, Europe and Asia-Pacific with similar result of high income yield to the investors. However, there have been no report of the Africa REIT except South Africa Property Unit Trust and Property Loans Stock that features in the EPRA Global REIT survey. In an attempt to assess performance of Nigeria REIT and bring it to global awareness, this paper investigates the performance of Nigeria REIT (N-REIT) in its 7 years of existence (2007 to 2014) using Malaysia REIT (M-REIT) as a benchmark and possible improvement. The study adopted risk adjustment return analysis of the dividend distribution over the period of the REITs establishment. The study found that Nigeria REIT underperforms the benchmark, Malaysia REIT, both in terms of average return 4.8% and risk adjusted return -6.77% per annum against the Malaysia REIT 7.5% and 2.47% respectively. There is no significant differences in the risk return ratio for the two REITs. The underperformance of the Nigeria REIT suggest that the superior performance of REIT does not apply across all REIT markets, suggesting that differences in REIT structure and features can be a determining factor(s) in investment performance. The study recommends an increased capitalisation, market transparency and external management option for N-REITs performance enhancement. The non-evaluation of multivariate effect of these factors in this study is considered to be a limiting factor. Such study could be a future research focus. Key words: Dividend return, Malaysia, Nigeria, REIT performance, risk adjusted return.

Lipper’s rating and the performance of unit trusts in Malaysia

Purpose – The purpose of this paper is to examine the risk-adjusted performance of rated funds and determine the usefulness of Lipper Leader rating of unit trusts in Malaysia during the period 2000 to 2010. Design/methodology/approach – The paper utilizes the Sharpe ratio, Treynor ratio, Jensen’s alpha and Fama-French three-factor model to measure performance. Findings – During the period of study, the performance of the market index and risk-free rate outperformed that of 68 equity unit trust funds in the 3-year, 5-year and 10-year investment horizons. The ranking, based on four performance measures, corresponds to Lipper rating for the lowest rated and leader funds, but not for the three- and four-key rated funds. Further, there is a significant difference in the performance of the five-key, four-key and three-key rated funds which outperform the lowest rated funds, indicating that Lipper rating is able to distinguish superior and inferior unit trust funds. Research limitations/implications – Some of the limitations in this study are that the indexes could be self-constructed. The existing index might not represent the asset allocation of the funds concerned. Additional variables might have to be considered when examining fund performance as they should correspond to the characteristics of a fund. Practical implications – The results indicate that Lipper rating classification could identify the highest and lowest performing funds. Therefore, investors could use this rating to make informed investment decisions without undertaking time-consuming analysis to ascertain the good- and bad-quality funds in the market. Social implications – The findings of this study could be used by the academia as another source of reference to enhance their understanding of the applicability of Lipper rating for unit trust funds in an emerging market. Originality/value – The contribution of this study is that it analyzes the effectiveness and capability of Lipper Leader rating in identifying quality funds in the context of an emerging market. Performance comparison between Lipper Leader rating and methods used in the portfolio theory bridges the theory-practice gap between practitioners and academics. To date, there have been no attempts to study and compare the ratings of advisory firms with theoretical performance measures, particularly in the context of Malaysia.

Retirement savings investment decisions: evidence from Malaysia

This paper investigates individual retirement savings investment choices of members of Malaysia's Employees Provident Fund (EPF). The focus is on the option available to EPF members to invest part of their savings in approved unit trusts. A survey of EPF members allows a contrast with existing empirical evidence, largely drawn from developed countries. Three significant factors are identified: perceived importance of financial advisor; financial risk tolerance and perceived plan design. Gender and marital status were also significant predictors of investing in the unit trusts, though religion and religious commitment were not significant. Several implications emerge from these findings. First, results highlight the important role of unit trust consultants in individuals’ choices which in turn highlights the important role of the governing body of consultants in ensuring appropriate advice is delivered to clients. The study is relevant to the EPF as policy-maker, on the behaviour and attitudes of its members.

Stock Selection Skill, Manager Flexibility, and Performance: Evidence from Unit Investment Trusts

Unlike mutual funds, unit investment trusts invest in a fixed portfolio of stocks for a predetermined period of time and hold limited cash positions. Thus, UITs provide an ideal sample to measure stock selection skill. We examine a sample of 1487 UITs over the period 2004 to 2013. We find that UITs generate significant negative alphas indicating poor stock selection skills. We compare the UITs to actively managed mutual funds characterized by high turnover ratios and high cash holdings. The UITs significantly underperform both groups of mutual funds suggesting that restricting flexibility and maintaining full investment in the market does not result in better risk adjusted performance.

An investigation of investors’ estimates of returns earned and the effect of anchoring on these estimations

This study examines overconfidence and anchoring in an investing environment to determine if there is evidence of the phenomenon amongst a sample of academics at participating universities.A survey was sent out to over 6,000 staff members at four South African universities assessing respondents’ estimations of their returns earned in unit trusts in which they were invested, as well as assessing whether they would adjust their estimate when presented with an anchor – the relevant Johannesburg Stock Exchange (JSE) All Share Index return. A total of 466 completed responses were obtained, of which 81 respondents indicated that they were invested directly in a South African equity unit trust to allow for statistical testing. The data obtained were analysed for evidence of overconfidence and anchoring by comparing respondents’ estimates of fund returns against historical returns and then checking whether they adjusted their estimate after being presented with an anchor.The study found that investors were under-confident rather than overconfident. Furthermore, it was found that older respondents were better able to estimate their past returns than younger respondents. The presence of an anchor appeared to have no effect on respondents’ estimates.