Performance Evaluation of Open-ended Equity Funds in Pakistan

Muhammad Azeem; Rohania Ahmad; Muzammil  Khurshid; Fasial Ashraf

doi:10.69565/jems.v2i2.144

Authors

Muhammad Azeem University of Central Punjab, Gujranwala Campus
Rohania Ahmad Department of Business and Management, University of Central Punjab, Lahore, Sialkot Campus
Muzammil Khurshid Department of Banking and Finance, University of the Punjab, Gujranwala Campus
Fasial Ashraf Department of Business Administration University of the central Punjab, Gujranwala Campus

DOI:

https://doi.org/10.69565/jems.v2i2.144

Keywords:

Open-ended equity funds, KSE, Fund performance, Sharpe ratio, Trynor ratio, Jensen’s Alpha

Abstract

Fund Management is not new to the world, but in emerging markets like Pakistan, there is much to be done regarding research. This research aims to study the performance of open-ended equity mutual funds. Currently, 16 Asset Management companies are working in Pakistan. Twenty-one funds were selected based on the availability of data on funds returns. Data has been collected from the website of the Mutual Fund Association of Pakistan from 2009 to 2013. Three different investment horizons of fund performances, i.e. 5-year, 3-year and 2-year, were analysed using the conventional measures: Sharpe Ratio, Trynor Ratio and Jensen’s Alpha. The results showed that funds significantly outperformed the market for all the periods. On average, the fund performance is significantly positive. However, some funds showed negative returns under the Trynor measure for 5 and 3-year periods. It is concluded that the Pakistani investor can get better value for their investment by investing in open-ended equity funds.