The Performance of Mutual Funds Manager for Stock Selection Investment

Abstract

For a competent fund manager to ensure an extra risk-adjusted return over the long term, stock selection and market timing are essential skills. However, not all fund managers possess the same abilities. The current study attempts to identify the aforementioned traits in Indian multi-cap mutual fund managers by using four well-known models in this field: Jensen's Alpha, Fama's Decomposition of Return, the Treynor-Mazuy (unconditional) Model, and Henriksson-Merton (unconditional). Based on an analysis of the monthly returns of the chosen multi-cap funds using the BSE 500 as the market portfolio and the Public Provident Fund rate as the risk-free rate of return, the study came to the conclusion that the managers of the selected multi-cap funds did not exhibit any superior stock selection or market timing skills.