Relationship between Mutual Fund Type, Portfolio Turnover, Longevity, Management Turnover, and Performance

Mutual fund portfolio managers do not always meet risk-adjusted performance expectations, resulting in loss of capital reserves. Out of 3,612 U.S. based open-ended mutual funds, the risk-adjusted performance of 2,890 (80%) failed to meet or beat the S&P 500 (index fund) performance between the year 2006 to 2016. Grounded in Markowitz's modern portfolio theory, the purpose of this correlational study was to examine the relationship between mutual fund class type, portfolio turnover, fund longevity, management turnover, and annual fund risk-adjusted performance. Archival data were collected from 88 U.S. based equity mutual funds companies. The results of the multiple regression analysis indicated the model as a whole was able to significantly predict annual fund risk-adjusted performance for the 5-year period ending 2016, F (4, 83) = 3.581, p =.043, R2 = .147. In the final model, mutual fund class type and portfolio turnover were statistically significant with mutual fund class type (Ã?= .249, t = 2.302, p = .024) accounting for a higher contribution to the model than portfolio turnover (Ã? = .238, t = 2.312, p = .023). Mutual fund longevity and management turnover did not explain any significant variance in annual fund risk-adjusted performance. Society can benefit from the results of this doctoral study because investors and mutual fund managers could better predict the return based on the information from the study, which may lead to higher families' confidence in the positive contribution of the mutual fund in their portfolio.