Muhammad Arsalan

FINAL YEAR PROJECT

Topic
Affect of Fund Size on Mutual Fund Performance

Contents
Objective Importance Introduction Population, Sampling Technique, and Size Data and Methodology Hypothesis Results Conclusion Recommendation

Objective
My objective in this study was
To find out the affect of mutual fund size on mutual fund performance To determine the relation between mutual fund size and its NAV return

Importance
This study will be a helpful guideline for the investors who want to invest in mutual funds
Especially small investors who seek for safer opportunities investment with handsome returns.

Introduction
Mutual fund refers to a pool of securities A number of investors make investment in it with a common objective of getting profit, and it is managed by professional fund managers It is diversified in nature, therefore, it is considered safe and less risky investment There are two basic structural types of mutual funds
Open end funds: continue to sell and repurchase shares after their initial public offerings Close end funds: operates like a public limited company, and its stock trades on the regular secondary market

In Pakistan, Mutual Funds Association of Pakistan (MUFAP) is the trade body for Pakistan's multi billion rupees asset management industry.

Population, Sampling Technique & Size

Population
I have worked on open end type of mutual funds. There are 126 open mutual funds working in Pakistan

Sampling Technique
In this study I have exercised convenience sampling and I have picked up the samples which I got conveniently from these 126 open end mutual funds

Sample Size
I have used last five years quarterly data of the nine open end funds out of the total number of population

Data and Methodology

I used,
Last five years quarterly data, mutual funds NAV returns as dependent variable, and Total size or volume of the fund as the independent variable

I used regression and correlation to analyze the relation between mutual funds size and NAV return

Hypothesis
Ho: Mutual fund size does not affect NAV returns
HA: Mutual fund size affects NAV returns

Results
According to the regression result
As my P value is 0.0786, which is less than 0.1 Therefore, My null hypothesis, mutual fund size does not affect NAV returns, has been rejected According to the results, I have found an inverse relation between mutual fund size and NAV returns. Because, The value of coefficient is -0.275229 and it is showing the inverse relation between the variables I have used. The value of R square is 0.0702

The value of correlation is -0.16295

NAV Returns

0.4 0.2 0 -0.2 -0.4 -0.6 -0.8 -1

Conclusion
In the graph it can be seen that initially, in 2007, there were both negative and positive results on and off

But moving ahead it is showing disastrous negative returns that destroyed the major investment in the mutual funds
It was the time when recession was on its peak and there was a massive liquidity crisis in the world, this business also affected very much. Later on it is indicating the recovery but it is not well enough which can overshadow the past destructions. Because of these devastating returns asset management companies are still striving to cater the effects of these circumstances.

Recommendation
Government must ensure the proper law and order situation in the country It is also very important to implement such policies which can be effective to keep the inflation rate as low as possible. It will consequently give the confidence to the investors.

Government should create investor friendly environment and implement flexible tax policies i.e. do not impose taxes with different names
AMCs should maintain a contingency fund in order to cope with the situations which they have faced in the couple of two years back, like liquidity crisis and economic recession.

Thank You