Technological, healthcare and consumer funds efficiency: influence of COVID-19

Catarina Alexandra Neves Proença (), Maria Elisabete Duarte Neves (), Maria Castelo Baptista Gouveia () and Mara Teresa Silva Madaleno ()
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Catarina Alexandra Neves Proença: CeBER, Faculty of Economics
Maria Elisabete Duarte Neves: Coimbra Business School | ISCAC
Maria Castelo Baptista Gouveia: CeBER, Faculty of Economics
Mara Teresa Silva Madaleno: University of Aveiro

Operational Research, 2023, vol. 23, issue 2, No 4, 42 pages

Abstract: Abstract This paper aims to analyze the efficiency of the funds in technological, healthcare, and consumer cyclical sectors based on the U.S. News & World Report rankings. We employed a Principal Component Analysis to select the indicators to explain efficiency. Then, we have used an alternative approach that combines Data Envelopment Analysis (DEA) with Multiple Criteria Decision Aiding, the Value-Based DEA, to assess the efficiency of funds for 1 year (2020), 3 years (2018–2020), and 5 years (2016–2020). The results highlight that in 2020 the number of efficient funds is much smaller than in previous periods and this can be justified by the effect of the COVID-19 pandemic crisis. The sectors with the most efficient funds are technology and healthcare. The factors that determine the efficiency of funds in the health sector and the technology sector are quite different, although they have not undergone major changes in the three periods considered. For managers, health funds are seen as low risk and hardly consider the return factors in all analyzed periods, which is often considered as benchmarks for inefficient funds. In the technology sector, Beta and Alpha are generally the indicators with the greatest weight in fund efficiency, showing that these funds beat the market in terms of returns and are less risky than the benchmark. This study seeks to complete the scarce existing literature on the subject, namely in the sectors under analysis, seeking to identify the indicators that fund managers ponder most to consider a fund as efficient. As far as we know, the joint efficiency analysis of these sectors and the impact they suffered from the COVID-19 pandemic are new in the literature.

Keywords: Investment funds; Efficiency; COVID-19; Healthcare; Technology; Consumer cyclical; DEA; PCA (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s12351-023-00749-x

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