Does active management work?

Evidence from equity sector funds

Authors

  • Crystal Y. Lin School of Business, Eastern Illinois University

DOI:

https://doi.org/10.61190/fsr.v23i3.3489

Keywords:

Sector investing, Active mutual fund management, Mutual fund performance

Abstract

This study presents considerable evidence that equity sector mutual funds, the nine Fidelity Select Portfolios here, have provided better after-expense returns against broader market ETF, SPY, and their peer sector ETFs, the nine Select Sector SPDR Funds, over the sample period 1999–2010. Not only do they achieve higher nominal returns over the 12 years, except for few sector mutual funds, some of the funds also generate higher risk-adjusted returns measured by Sharpe Ratio and ! from various asset pricing models. More important, none of the sector mutual funds generates a significant negative ! for the sample period no matter that asset pricing model is used. The results suggest that actively managed sector funds be considered by individual investors and/or their financial planners for mutual fund selection.

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Published

2014-09-30

How to Cite

Lin, C. Y. (2014). Does active management work? : Evidence from equity sector funds. Financial Services Review: The Journal of Individual Financial Management, 23(3), 249–271. https://doi.org/10.61190/fsr.v23i3.3489

Issue

Vol. 23 No. 3 (2014): Fall 2014

Section

New Original Submission

License

Copyright (c) 2014 Academy of Financial Services

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