Abstract
SUMMARY The positive difference between the revenues and the expenditures of an economic individual constitutes savings. A vast majority of households from developed economies have significant amounts of savings. These savings are utilized diversely within diverse markets. This utilization process can both be carried out by the savings-owners and some professional institutions called institutional investors. There are significant benefits enjoyed by the small saving-owners arising from the handling of the savings by professional institutions. Thanks to these institutions, the small savings-owner takes the benefit from professional managers together with the advantages he can get from a great portfolio. Besides, these institutions prevent the savings-owners from facing enormous losses as they invest the savings they collect to diverse investment tools. Also, they provide the economies with great contributions by expanding the capital markets. Mutual funds are one of the major institutional investors. They put forth a great development in the last fifty years. Especially a noteworthy part of the investments towards the capital market is performed by the mutual funds. As the market for mutual funds expand, number of the mutual funds increase; and the decision on which ones to purchase is gradually getting difficult. To ease this choice, performance evaluating measures were introduced. And regarding our reserach, we dwelled on these criteria and the results that they put forth. Our research paper consists of 5 main sections: -In the first section, information on the definition and functions of mutual funds and the market for mutual funds both for Turkey and the world is given. -In the second section, in addition to basic information regarding the risk and the advantage ; some explanations were made concerning the portfolio management process and asset pricing models in which the performance evaluation is included. -In the third section, performance evaluation measures and the empirical results derived from these are handled. - In the fourth section, towards the aim of developing the performance evaluating process, the separation of the performances of mutual funds; the sensitivity of the profits gained from mutual funds towards the comparison criteria, personal characteristics of the managers and to some other factors were dwelled upon.- Lastly in the fifth section, we applied performance evaluation measares to Turkish mutual funds. We derived these conclusions at the end of our theoretic research: - Mutual funds are not able to provide net positive income. In other words, funds are not able to ensure an income enough to meet the management and process costs. On the other hand, they ensure positive values on the basis of gross income. -Performances of the mutual funds are not only composed of the success concerning the asset choice. Besides, the fund managers benefit from the market movements. And that constitutes a timing compartement. -Mutual funds are sensitive towards the models used in the performance evaluation; the comparison criteria; and the sample numbers. -Some personal characteristics like educational backgroud and ages of the mutual fund managers bear importance in determining the performance of the fund. -Employing conditional performance evaluation rather than the unconditional performance evaluation gives more positive performance results. Our application research in which we examined the performances of A type mutual funds in Turkey between years 1996-2000 led us to the following conclusions: - Mutual fund risk adjusted performance measures result in implications parallel to each other as they do regarding the research carried out abroad. A correlation of 95% is observed. -The average performance of mutual funds in Turkey is below the market income as it is abroad. -An investment carried out by relying on the mutual fund criteria adjusted according to risk has provided an income 200% above the average. -The performance of mutual funds has a characteristic of continuity at most. -The most successful (effective) group is the mixed funds; while the least successful one is the stock fundsAll these conclusions are a summary of the research on performance evaluation taking place within the last decade. Evaluation of the performance of the mutual funds does not only consist of introducing some certain measures. On the contrast, it is the examination of a process; due to the fact that measure alone, do not lead us to the reality. This performance evaluation is regarded as a process; and all the integral parts forming this process are examined. This process is tried to be understood by various assumptions and regressional methods. All these research will facilitate the investors to choose the best funds. Under these circumstances, the market will deepen more and more by the increase in concern towards the market for mutual funds.
