Market Timing, Selectivity and Mutual Fund Performance: An Empirical Investigation of Selective Equity Diversified Schemes in India

Rakesh Kumar

The IUP Journal of Financial Economics, 2012, vol. X, issue 1, 62-84

Abstract: This study is based on the monthly data of 28 equity diversified Indian fund schemes for the period from January 2007 to June 2011. The selected equity diversified fund schemes show mixed performance. About 60% of the fund schemes were able to beat the benchmark markets. Better performing fund schemes were exposed to higher risk but were less afflicted to market risks. All the schemes under study were relatively exposed to less risk than the market, however with high degree of volatility. A majority of the funds were reasonably diversified and reduced the unique risk. Consequently, unique risks and the returns were negatively associated. The study also exposes that about 58% of fund schemes were capable of beating the market by stock selection skills. So far as market timing is concerned, the fund managers almost failed both to book the profits in the up market and accumulate the stock in the down market.

Date: 2012
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