THE PERFORMANCE OF MUTUAL FUNDS IN THE PERIOD 1945–1964

THE PERFORMANCE OF MUTUAL FUNDS IN THE PERIOD 1945–1964 I. I ntroduction A CENTRAL PROBLEM IN FINANCE (and especially portfolio management) has been that of evaluating the “performance” of portfolios of risky investments. The concept of portfolio “performance” has at least two distinct dimensions: 1) The ability of the portfolio manager or security analyst to increase returns on the portfolio through successful prediction of future security prices, and 2) The ability of the portfolio manager to minimize (through “efficient” diversification) the amount of “insurable risk” born by the holders of the portfolio. The major difficulty encountered in attempting to evaluate the performance of a portfolio in these two dimensions has been the lack of a thorough understanding of the nature and measurement of “risk.” Evidence seems to indicate a predominance of risk aversion in the capital markets, and as long as investors correctly perceive the “riskiness” of various assets this implies that “risky” assets must on average yield higher returns than less “risky” assets. 1 Hence in evaluating the “performance” of portfolios the effects of differential degrees of risk on the returns of those portfolios must be taken into account. Recent developments in the theory of the pricing of capital assets by Sharpe [ 20 ], Lintner http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Journal of Finance Wiley

THE PERFORMANCE OF MUTUAL FUNDS IN THE PERIOD 1945–1964

The Journal of Finance, Volume 23 (2) – May 1, 1968

Loading next page...
 
/lp/wiley/the-performance-of-mutual-funds-in-the-period-1945-1964-xUXPeWjv5r
Publisher
Wiley
Copyright
1968 The American Finance Association
ISSN
0022-1082
eISSN
1540-6261
DOI
10.1111/j.1540-6261.1968.tb00815.x
Publisher site
See Article on Publisher Site

Abstract

I. I ntroduction A CENTRAL PROBLEM IN FINANCE (and especially portfolio management) has been that of evaluating the “performance” of portfolios of risky investments. The concept of portfolio “performance” has at least two distinct dimensions: 1) The ability of the portfolio manager or security analyst to increase returns on the portfolio through successful prediction of future security prices, and 2) The ability of the portfolio manager to minimize (through “efficient” diversification) the amount of “insurable risk” born by the holders of the portfolio. The major difficulty encountered in attempting to evaluate the performance of a portfolio in these two dimensions has been the lack of a thorough understanding of the nature and measurement of “risk.” Evidence seems to indicate a predominance of risk aversion in the capital markets, and as long as investors correctly perceive the “riskiness” of various assets this implies that “risky” assets must on average yield higher returns than less “risky” assets. 1 Hence in evaluating the “performance” of portfolios the effects of differential degrees of risk on the returns of those portfolios must be taken into account. Recent developments in the theory of the pricing of capital assets by Sharpe [ 20 ], Lintner

Journal

The Journal of FinanceWiley

Published: May 1, 1968

References

You’re reading a free preview. Subscribe to read the entire article.


DeepDyve is your
personal research library

It’s your single place to instantly
discover and read the research
that matters to you.

Enjoy affordable access to
over 18 million articles from more than
15,000 peer-reviewed journals.

All for just $49/month

Explore the DeepDyve Library

Search

Query the DeepDyve database, plus search all of PubMed and Google Scholar seamlessly

Organize

Save any article or search result from DeepDyve, PubMed, and Google Scholar... all in one place.

Access

Get unlimited, online access to over 18 million full-text articles from more than 15,000 scientific journals.

Your journals are on DeepDyve

Read from thousands of the leading scholarly journals from SpringerNature, Elsevier, Wiley-Blackwell, Oxford University Press and more.

All the latest content is available, no embargo periods.

See the journals in your area

DeepDyve

Freelancer

DeepDyve

Pro

Price

FREE

$49/month
$360/year

Save searches from
Google Scholar,
PubMed

Create folders to
organize your research

Export folders, citations

Read DeepDyve articles

Abstract access only

Unlimited access to over
18 million full-text articles

Print

20 pages / month

PDF Discount

20% off