The paper analyzes the returns earned by the sample mutual funds benchmarking\nwith market return. It also assesses whether they are taking advantages\nof diversification, market timing and selectivity of securities to their\ninvestors. Secondary data of eight sample mutual fundsâ?? have been used from\n2015 to 2018 published by Nepal Stock Exchange and respective fund manager.\nRisk adjusted performance measures Jensen alpha, Treynor ratio and\nSharpe ratio have been used to analyze return in terms of risk and Co-efficient\nof Determination (R2), Quadratic Regression of Treynor and Mazuy and Famade\ncomposition model are employed to assess diversification, market timing\nand selectivity ability of fund manager. The result explores that funds that\nare operated from 36 months over-perform benchmark market index and\nthose funds operated for 16 months are suffering from very low return. Further\nevidence shows that low amount of diversification, moderate level of selectivity\nand no significant relationship between timing skill and return of\nfunds.
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