Factors affecting mutual fund performance in Pakistan

Abstract

The crux of this research is to critically evaluate the potential mutual fund performance drivers. This research will benefit the stakeholders in terms of smart investment decisions. The study is based on convenient sampling method covering 16 out of 19 asset management companies (AMCs) that comprise 114 outstanding funds in the Mutual Fund Association of Pakistan (MUFAP). The data were collected quarterly from March 2013 to March 2018. The findings reveal that the asset under management, fund risk, KSE-100 returns, total income, total expense, age of the fund and lagged returns have a significant positive impact. Management quality rating has an insignificant positive impact on returns. In contrast, risk-free instruments have a significant negative impact on fund returns (FRs). A multiple regression model was used to extract results, and the results further suggested that the roles of fund risk and market return have a significant impact on FRs. Furthermore, we could not avail data for more than 5 years due to unavailability on independent platforms like MUFAP and the official websites of the respective AMCs, which is the central gap of this research. Moreover, it is highly suggested to use different statistical tools to make more meaningful results in future research.

Keywords: Asset under management, fund returns, fund risk, KSE-100 return, mutual funds.