Abstract
In order to evaluate the performance of mutual fund industry in various financial markets a wide
variety of researches have been conducted, which lead to different results. As Pakistani mutual
fund industry is much younger as compared to the US and UK fund industries and thus limited work
has been done to evaluate Pakistani mutual fund industry. Over the past few years the industry had
showed a phenomenal growth and it makes it worthwhile to study the performance of mutual
funds. The aim of this research study is to validate the Fama French 3-Factor Model and Carhart 4-
Factor Model. Also this research attempts to test that which one of the included model performs
better than the other so as to check there preferred suitability in measuring and evaluating the
mutual fund performance in Pakistan. The monthly data of 323 open ended mutual funds for the
period of 2008 to 2018 is analyzed. The GRS model validation test was applied, the results of the
test found that the Carhart 4-Factor Model performed much better than the Fama French 3-Factor
Model and from the CAPM as well. This research contributes to the body of knowledge by
providing academicians and practitioners more knowledge regarding multifactor asset pricing
model so as to make better investment decisions.
Ayesha Iraj , Syed Mohsin Ali. (2019) Performance evaluation of Pakistan’s mutual fund industry, Abasyn Journal of Social Sciences, Volume-12, Issue-2.
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