Holding period for positive return from Indian mutual funds

  • 1066 Views
  • 152 Downloads

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License

In India, households predominantly prefer to invest their surplus in financial securities, which provide stable return irrespective of whether they beat inflation or help in creating wealth. However, financial planners advise their clients to invest their surplus for long term in risky assets such as mutual funds to generate inflation beating returns. But when households ask for the meaning of long term in a definite number, it varies among the financial advisors. Hence, the study made an attempt to answer this question by calculating the minimum time duration required to generate a minimum positive return for two indices (NIFTY 50, S&P BSE SENSEX) and 6 mutual fund schemes for a period of 23 years and the same two indices (NIFTY 50, S&P BSE SENSEX) and 20 mutual fund schemes for a period of 12 years and found out that the time horizon or the long term to ensure minimum positive return ranges from 5 years to 9 years depending up on the type of fund or the level of risk associated with the mutual fund schemes.

view full abstract hide full abstract
    • Table 1. Changes in financial assets of the household (in %)
    • Table 2. Risks and return of market indices
    • Table 3. Stationary test results
    • Table 4. Rolling period CAGR (in %) for S&P BSE SENSEX, NIFTY 50, FIPF, FIBF & FIPPF schemes (from 1995 to 2018)
    • Table 5. Rolling period CAGR (in %) for ABSLEH95F, HDFCCBVF and SBIEHF schemes (from 1995 to 2018)
    • Table 6. Rolling period CAGR (in %) for ABSLEF, ABSLEH95F, ABSLFLEF, DSPEHF, DSPOF schemes (from 2006 to 2018)
    • Table 7. Rolling period CAGR (in %) for FIEHF, FISCF, FITS, HDFCCBVF, HDFCHEF schemes (from 2006 to 2018)
    • Table 8. Rolling period CAGR (in %) for HDFCLTAF, HDFCLTOP100F, SBIBF, SBIEHF, SBIMMCF schemes (from 2006 to 2018)
    • Table 9. Rolling period CAGR (in %) for FIPF, FIBF, FIPPF, SBIMMULCF, SBIMTGF schemes (from 2006 to 2018)
    • Table 10. Rolling period CAGR (in %) for market indices S&P BSE SENSEX and NIFTY 50 (from 2006 to 2018)
    • Table 11. Rolling period risk and return behavior of S&P BSE SENSEX and NIFTY (from 1995 to 2018)
    • Table 12. Rolling period risk and return behavior of FIBF, FIPF and FIPPF (1995–2018)
    • Table 13. Rolling period risk and return behavior of ABSLEH95F, HDFCCBVF and SBIEHF (1995–2018)
    • Table 14. Rolling period risk and return behavior of ABSLEF, ABSLEH95F and ABSLFLEF (2006–2018)
    • Table 15. Rolling period risk and return behavior of FIBF, FIHEF and FIPF (2006–2018)
    • Table 16. Rolling period risk and return behavior of FIPPF, FISCF and DSPEHF (2006–2018)
    • Table 17. Rolling period risk and return behavior of FITS, HDFCCBVF and HDFCHEF (2006-2018)
    • Table 18. Rolling period risk and return behavior of HDFCLTAF, HDFCTOP100F and SBIBF (2006–2018)
    • Table 19. Rolling period risk and return behavior of SBIEHF, SBIMMCF and SBIMTF (2006–2018)
    • Table 20. Rolling period risk and return behavior of DSPEOF and SBIMMULCF (2006–2018)
    • Table 21. Rolling period risk and return behavior of SENSEX and Nifty (2006–2018)
    • Table 22. Summary of findings of minimum holding period for positive returns across indices and different categories of mutual fund schemes
    • Table 23. Summary of findings
Related Articles

  • Financial evaluation of Tadawul All Share Index (TASI) listed stocks using Capital Asset Pricing Model

    Nisa VinodkumarORCID , Hadeel Khalid AlJasser doi: http://dx.doi.org/10.21511/imfi.17(2).2020.06
    Investment Management and Financial Innovations Volume 17, 2020         Issue #2         pp. 69-75 Views: 1803 Downloads: 628 TO CITE АНОТАЦІЯ

    The Kingdom of Saudi Arabia is strongly committed to stimulating savings culture in the local community by providing financial literacy in financial planning, investments, and budgeting. Inculcating the savings and investment behavior among the people will help materialize one of the elements of Saudi Vision 2030. Tadawul, being the most liquid stock market in the Middle East and North Africa, offers investors the ability to grow their capital with confidence through facilitating trading in different securities such as equities, debt instruments, and Exchange Traded Funds (ETFs). There is a great scope for investors to invest in the companies listed in Tadawul All Share Index (TASI) due to its strong economic fundamentals. The present study aims to apply the CAPM in Tadawul listed stocks, which will help in understanding the systematic and unsystematic risk associated with stocks, understanding their actual and theoretical return on stocks. The methodology adopted is the analysis of secondary data for all listed stocks in Tadawul using the Bloomberg terminal. The financial valuation includes elements like beta, alpha, correlation and standard deviation, expected return and actual return. The practical value obtained from the study will help investors go for undervalued stocks with lower beta, higher expected annual return, and lower systematic risks. Thus, the result shows the predicting power in KSA market and the scope for long-term investments by the investors to boost their savings and investment behavior and materialize one element of Vision 2030.

    Acknowledgment
    This research was funded by the Deanship of Scientific Research at Princess Nourah bint Abdulrahman University through the Fast-Track Research Funding Program.

Download Preview
Close
Investment Management and Financial Innovations
Investment Management and Financial Innovations