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- Title
NO-LOAD EQUITY MUTUAL FUNDS VERSUS THE S&P 500 INDEX FUNDS DURING BULL AND BEAR MARKETS.
- Authors
Apap, Antonio; Masson, Dubos J.
- Abstract
This research project investigates the performance of no-load equity mutual funds to determine if investors can earn higher returns by selecting mutual funds based on past performance as compared to investing in the S&P 500 Index funds. Thirteen years (1990-2002) of performance data on no-load equity mutual funds and the returns of the proxy for the S&P 500 Index funds were collected. No-load equity mutual funds in the aggressive growth, growth, and growth-income categories were selected based on past performance using the method developed by Apap and Griffith (1996). The proxy for the S&P 500 Index funds was selected using subjective criteria such as no load, low expense ratio, and fund invests in all of the Index's stocks. The risk-adjusted returns of the selected funds were compared to the risk-adjusted returns of the selected S&P 500 Index fund for the bull and bear markets during the period 1990 - 2002, to determine if the selected no-load mutual funds earned risk-adjusted returns superior to the selected S&P 500 Index fund. The returns of the selected funds were investigated for risk-return compliance using the Capital Asset Pricing Model (CAPM) and Jenson's Alpha for the period studied. The results of the study indicate that, when adjusting for risk during bull and bear markets, the selected funds in the aggressive growth, growth, and growth-income categories outperformed the S&P 500 Index fund. These findings suggest that investors willing to do the research, should use past performance when selecting mutual funds.
- Subjects
NO-load mutual funds; STANDARD &; Poor's 500 Index; INVESTORS; RATE of return; RISK; MUTUAL funds
- Publication
Journal of Accounting & Finance Research, 2005, Vol 13, Issue 3, p9
- ISSN
1093-5770
- Publication type
Article