LUCK VERSUS SKILL IN INDIAN MUTUAL FUNDS

S.P. Uma Rao, University of Louisiana at Lafayette, U.S.A.
D. Boudreaux, University of Louisiana at Lafayette, U.S.A.
D.R. Adhikari, University of Louisiana at Lafayette, U.S.A.

Published in

JOURNAL OF ACADEMY OF BUSINESS AND ECONOMICS
Volume 19, Issue 4, p5-14, December 2019

ABSTRACT

The latest Fama and French (2010) bootstrap simulation methodology is applied to the monthly returns of the six Indian mutual funds over the period January 2014 through January 2019, to test for skill or luck of fund managers. The distribution of alphas as well as their t-statistics are computed and compared to a normal distribution of t-statistics that would be randomly expected. Recent empirical studies of mutual fund performance attempt to identify if superior returns are derived by fund managers' skill or luck. Most active Indian fund managers do worse than what is expected by random chance.

Keywords

India mutual funds, Fama and French, Boot-strapping, luck, skill, fund performance, active, passive, fund management, Carhart four-factor model


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