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Dr. Khaleequzzaman Khan, Asst. Professor and Head
of the Dept of Management, Marketing, and Information
Systems gave a seminar entitled “Performance
Evaluation of Selected Mutual Funds” on Tuesday
the 15th of May, 2007. He presented a case study
of selected Omani, Saudi Arabian and Indian mutual
funds and started his seminar by stating that mutual
funds are one of the fastest growing areas of financial
services in India and in the GCC. In the Gulf,
investment in mutual funds as a percentage of the
GDP is relatively low; however, recent research
has shown positive indication for more growth in
this area.
Though still at a nascent stage, mutual funds
in India and the Gulf offer a lot of schemes and
serve all types of investors in a broad manner.
Apart from liquidity, these funds have also provided
very good returns on a year-to-year basis. Moreover,
foreigners are not allowed to invest directly in
the financial markets in some of the Gulf countries
such as Saudi Arabia, but they can do so, but only
through the use of mutual funds. Investments
in stocks or in their derivatives can not be termed
as being safe with certainty, as they are inherently
risky. But, different funds have different risk
profiles, which are stated in their objectives.
Funds with low risk invest generally in debt, which
is less risky than equity. Anyway, as mutual funds
are managed by expert fund managers, they are taken
as safer than direct investment in the stock markets.
This is because the fund mangers study and analyze
the companies’ financial status more minutely
than an individual can do. Taking into consideration
the importance of mutual funds as a conduit for
investment in general, the paper tried to evaluate
the performance of a few selected equity mutual
funds in India, Oman, and Saudi Arabia. Though
past performance alone can not be indicative of
future performance, it is, frankly, the only quantitative
way to judge how good a fund is at present. For
this purpose, risk adjusted performance measures
suggested by Treynor, Sharpe and Jensen models
were used.
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