Performance Evaluation and Fund Selection Criteria for Mutual Funds over the Period 2000-2011

Abstract

This article examines the performance of 1374 actively managed mutual funds over the period 2000-2011 in order to identify trading strategies which may be used by financial planners and investors in selecting the right type of mutual funds to achieve specific investment goals. Each mutual fund’s performance is measured in excess returns. The key characteristics that are compared for each fund include: small-cap, mid-cap, large-cap funds, the funds’ total net asset value, expense ratio, fund manager’s tenure, each fund’s total percentage investment in the top ten percent of its holdings, and the percentage of each fund’s investment in cash.

The characteristics of the top performing funds (winners) and the lowest performing funds (losers) are identified in order to assist financial planners and investors in their investment decisions.