Investing in U.S. Sectors: Mutual Funds vs. ETFs

28 Pages Posted: 28 Dec 2019

See all articles by Yuhong Fan

Yuhong Fan

Weber State University (WSU)

Crystal Yan Lin

Eastern Illinois University - School of Business

Date Written: December 6, 2019

Abstract

This paper examines performance of 95 actively managed U.S. sector equity mutual funds from 29 fund families relative to their peer exchange-traded funds, SPDR sector ETFs, in the period of 2008 to 2017. Our results do not show considerable evidence that actively managed sector mutual funds outperform their passive counterparties. None of the mutual fund portfolios produces a significant positive alpha through factor models or delivers a significant positive alpha against their peer ETFs. When focusing on the 9 oldest actively managed Fidelity sector mutual funds, outperformance in the period of 1999-2010, which is reported in literature, appears to fade away during the period of 2011-2017. Alpha analyses of a larger sample of 60 sector mutual funds show similar performance deterioration in the same 19-year period. The results indicate that U.S. sector equity market has become more efficient in the past decade.

Keywords: Mutual Fund Performance, Active Mutual Fund Management, Sector Investing

JEL Classification: G11, G12

Suggested Citation

Fan, Yuhong and Lin, Crystal Yan, Investing in U.S. Sectors: Mutual Funds vs. ETFs (December 6, 2019). Available at SSRN: https://ssrn.com/abstract=3499789 or http://dx.doi.org/10.2139/ssrn.3499789

Yuhong Fan (Contact Author)

Weber State University (WSU) ( email )

3802 University Circle
Ogden, UT 84408
United States

Crystal Yan Lin

Eastern Illinois University - School of Business ( email )

Charleston, IL 61920-3099
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
93
Abstract Views
481
rank
349,223
PlumX Metrics