Mineral resource investments and mutual funds performance: A remedy for recovery in BRICS

Zhuo Chen, Nawazish Mirza, Muhammad Umar, Zeina Sawtari and Xin Xie

Resources Policy, 2024, vol. 91, issue C

Abstract: There is limited research that investigates how exposure to mineral resource firms impacts the performance of equity funds. This is an interesting phenomenon for BRICS that have a significant economic dependence on natural resources. In the present study, we address this gap by analyzing the comparative risk-adjusted performance of equity funds that have high or low investments in mineral resource firms. The study employs an exhaustive sample between 2012 and 2022 and evaluates funds based on absolute returns, risk-adjusted performance, and Jensen's alpha. Our results depict that funds that invest more in mineral resource firms tend to have higher absolute returns, demonstrate better risk-adjusted performance, and have significantly better alphas. It was worth noting that funds with higher exposure to mineral resource companies remained resilient during Covid periods and therefore this investment style is plausible a remedy for economic recovery. These findings underscore the importance of BRICS economies prioritizing the development and sustainability of their mineral resources sector.

Keywords: Mineral resources; Mutual funds; BRICS; Investment styles (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:91:y:2024:i:c:s0301420724002381

DOI: 10.1016/j.resourpol.2024.104871

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