| Mutual fund investments continue to remain a robust and integral part of the U.S. household investment portfolios. Despite numerous methodological studies, many areas are still divisive with regards to what investment criteria can be used to consistently optimize a mutual fund investment portfolio. This study examines three specific mutual fund attributes and their affect on predicting overall mutual fund performance. This study added to the existing literature by introducing new evidence on the causal effects of selected mutual fund attributes on total mutual fund performance by using: (a) different time periods, (b) different attributes, and (c) more recent data. The results of this study address some contradictory conclusions from previous studies and add new data regarding seldom used mutual fund attributes in determining total mutual fund performance. This study found that two of the three mutual fund attributes examined (Sharpe Ratio and management tenure) did affect total mutual fund performance and were statistically significant for a majority of the years examined. The findings are consistent with past researchers who found that selected mutual fund attributes do affect mutual fund performance; however, the degree of prediction power is relatively small. Results show that although all three attributes show evidence of affecting mutual fund performance, the combined effects of all the independent variables is greater. This may be interpreted that these three attributes, used together with other attributes may be worthwhile factors in explaining mutual fund performance. The data suggests there is some element of causation, but the effect on variability is small enough to suggest that these attributes alone are not enough to be used as the sole basis for individual investor mutual fund selection without considering the variety of other factors available. |
