Are Mutual Fund Managers Able to Create Return Better than Benchmark? : An Empirical Study across the World

Abstract

Mutual fund managers are facing issues to provide return better than benchmark due to lack of knowledge of using techniques like the Sharp portfolio construction method. Benchmark is nothing but the measurement average against the show of a mutual fund. Some well-known benchmarks are the BSE Sensex and NSE Nifty. The mainly large-cap oriented equity funds benchmark themselves against the Sensex or the Nifty. Other benchmarks are CNX midcap, CNX Small-cap, S&P BSE 200, etc. The fund manager’s primary task is generating risk-adjusted returns compared to their Benchmark (Alpha). To quantitatively measure the performance of the mutual fund manager across the world and how the sharps portfolio construction method helps the manager to provide return better than the benchmark. The research majorly focuses on the study of the measuring mutual fund manager unable to deliver return better than benchmark from 2014 to 2018 across the world. The Study focuses on 4 developed and 2 developing countries by Comparing indexes return with the portfolio return. With the help of using sharps construction portfolio method. Sharps portfolio construction method is used to create and manage investment portfolios by using a beta, alpha, standard deviation, residential variance, risk-free rate, and market risk.