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- Title
EVALUATING THE STOCK SELECTION SKILLS AND MARKET TIMING ABILITIES OF INDIAN MUTUAL FUND MANAGERS.
- Authors
MEHTA, DIVYA
- Abstract
Mutual funds are dynamic financial institutions, which play a key role in an economy by mobilizing savings and investing them in the capital markets. The present study proposes to examine the stock selection abilities and market timing abilities of Fund Managers in India by evaluating the performance of 23 growth mutual funds ranging over the period January 2007 to December 2011. The models used to judge stock selection skills are Jensen (Single Factor) and Carhart (4 Factor). Market timing ability is evaluated using the Augmented Treynor Mauzey Model. The study presents evidence that stock selection skills of the Indian mutual fund managers on an average are poor. Also they exhibit negative skills in timing the market. Majority of the sample mutual fund schemes' managers did not possess skills of stock selectivity and were not correct market timers. However, the study found that few sample schemes' managers performed with correct market timing skills. On comparison of the three models used in the study, it is inferred that the market return is the most important factor in explaining returns on the portfolios. It is determined that the Indian mutual fund managers must improve their skills relating to internal activities as well as external market related information so as to promote the confidence among small investors who prefer to invest their savings in mutual funds.
- Subjects
MUTUAL funds; FINANCIAL institutions; CAPITAL market; STOCKS (Finance); PORTFOLIO management (Investments)
- Publication
CLEAR International Journal of Research in Commerce & Management, 2014, Vol 5, Issue 4, p55
- ISSN
2249-4561
- Publication type
Article