Year of Graduation
The Comparison of Mutual Fund Selection Systems Efficiency
Today, investing in mutual funds is quite popular method of savings increase. However, the principles of making investment allocation decisions are still unstudied, whereas all investors want to know a safe strategy of most profitable fund selection. Thus, the present investigation focuses on the comparison of two mutual fund selection systems. Investors often choose the most profitable funds according to past performances. However, the study of managers’ personal qualities with the help of regression analysis have shown that they also affect fund performance, therefore, it is important to check whether this selection method bring greater profit. For this purpose, a comparison of portfolios, based on the managers’ characteristics and previous Jensen's alpha, was made. The results showed that it is rational for investors to rely on previous performances. This kind of research was not conducted before. The findings of this investigation will be useful for both investors and management companies that hire managers.