A Study on the Impact of Internal Factors of a Mutual Fund on Its Performance

R Vinith, V. S Abhilash and Sini V Pillai
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R Vinith: CET School of Management, College of Engineering, Trivandrum, Affiliated to APJ Abdul Kalam Technological University, India.
V. S Abhilash: CET School of Management, College of Engineering, Trivandrum, Affiliated to APJ Abdul Kalam Technological University, India.
Sini V Pillai: CET School of Management, College of Engineering, Trivandrum, Affiliated to APJ Abdul Kalam Technological University, India.

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Abstract: The primary aim of this study was to determine whether internal factors influence the performance of a mutual fund. Mutual funds are considered to be one of the best investment vehicles for mainstream investors. Therefore, several key internal elements were considered, such as the magnitude of the fund under management, the duration of fund management, the expenses & fees, portfolio turnover, the exit load, and the (NAV) of the mutual fund. For statistical testing, seven different hypotheses were set, with each internal factor tested for correlation against the CAGR. A few internal factors such as the magnitude of the fund, portfolio turnover, and NAV demonstrated a low negative correlation with CAGR. In contrast, other factors such as the duration of fund management and the fund management fees & expenses established a low positive correlation. Out of all internal factors, the Year-on-Year Performance and Exit load showed the most correlation, although the strength was moderate. Therefore, the study concluded that there was evidence to suggest a significant relationship between current performance, exit load, and performance of the mutual fund. On the contrary, the study could not find any statistical evidence to support the null hypothesis for other factors, such as the magnitude of the fund, portfolio turnover, and NAV. A multiple regression analysis was also performed, which revealed that only 22% of the mutual fund's performance could be explained by the internal factors, thereby implying that other factors influence most of the performance.

Date: 2021-06-03
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Published in Asian Journal of Economics, Finance and Management , 2021, 3 (1), pp.248-259

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05188050

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