The Mediating Role of Investment Strategy on the Relationship between Market Timing Ability and Mutual Fund Performance

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G. Kanuka Raju, K. Ramakrishna, Kamma Ramanjaneyulu, K. Radha Krishna

Abstract

The aim of the present research is to investigate the mediating role of investment strategy on the relationship between market timing ability and mutual fund performance in the contemporary context. The market timing ability include, economic indicators: Interest rates, inflation rates and GDP growth rate followed by technical analysis tools include: moving averages, relative strength index, fund manager expertise, investor confidence level and news and media influence, geopolitical development and natural disasters and pandemics. The mediating factor is the type of the investment strategy includes, the risk tolerance ability, time horizon, the main goals and objectives of investment strategy, market conditions and economic conditions and asset allocation and diversification. The mutual fund performance metrics are absolute returns, risk-adjusted returns, alpha value, beta value, net asset value (NAV), expense ratio and turnover ratio. Outcome:- The outcome of the research witnessed that, the impact of the market timing ability on mutual fund performance majorly dependents on the type of the investment strategy selected by the investor to invest in mutual funds. The strategic investment for enhance performance and risk assessment. Research Methodology/Approach/Design:- Designed closed ended structured questionnaire to collect the opinion of mutual fund investors with respect to three different constructs like: Market Timing Ability, Investment strategies and mutual fund investment performance. Limitations/Implications:- There are certain factors only considered under market timing ability, still there are other factor which enhances the performance of mutual funds. Sampling Technique:- Google Survey sheet being developed and applied simple random sampling technique to collect the opinion from various investors. Statistical Tools:- Applied both descriptive and inferential statistics which include Mean, SD, Correlation, Regression and Structural Equation Modeling Algorithm (SEM) and all the values of the model assessment model include, GFI, AGFI, NFI, TLI and CFI >.90 and RMSEA <.08 and Ch-Square value (P<.000). The measurement model witnesses the accuracy. Generalizability:- The outcome of the research and the model constructs can be used where need arises the mutual fund performance based on the market timing ability, the objective of investment strategy and mutual fund performance.

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How to Cite
G. Kanuka Raju. (2024). The Mediating Role of Investment Strategy on the Relationship between Market Timing Ability and Mutual Fund Performance. European Economic Letters (EEL), 14(4), 1393–1405. https://doi.org/10.52783/eel.v14i4.2270
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