This document discusses research on effective investment decisions in mutual funds. The objectives are to investigate herding behavior of investors, evaluate performance of mutual funds in Pakistan, and assess risk and return of individual funds. The research questions examine how herding can be measured, its impact on stock returns, evaluating past performance of Pakistani mutual funds, and comparing fund risk to returns. The document reviews literature on herding behavior and performance evaluation and presents the research design which involves pooled variance techniques, regression modeling, and measuring performance using Sharpe ratio, Treynor ratio, and Jensen's alpha. The study will collect data from secondary sources on 20 Pakistani mutual funds.

1. EFFECTIVE INVESTMENT
DECISION IN MUTUAL
FUNDS.

2. Mutual funds herding and its
influence on stock returns.
Mutual funds performance
evaluation.

3. Group members
1. Bahrawar said
2. faisal shehzad
supervisor
Dr Bakhtiar Ali

4. Introduction to the study
 Research objectives:
1. to investigate the herding behavior of investors
in
different situations.
2. Performance evaluation of mutual Funds in
Pakistan.
3. Evaluation of the risk and return from the
individual fund.

5. Research questions:
1. How herding behavior be measurable?
2. Does mutual funds herding has significant
impact on stock return?
3. How we can evaluate the mutual funds
performance in pakistan in past few years?
4. How risky are the funds involved in
comparison to return?

6. introduction
 A mutual fund is an entity that pools the money
of many investors to invest in different
securities. Investments may be in shares, debt
securities, money market securities or a
combination of all these.

7. Flow chart of M.F

8. types
 Open end funds:
 Depends on demand, buying and selling, IPO.
 Close end funds:
 Restricted, limited, buying and selling.

9. Herding definitions
Nofsinger and Sias (1999),
1.Group, same direction, same time.
2. A herd instinct relate to situations in which
individuals gravitate to the same investments,
based only on the fact that many others are
investing in those stocks.
Fear of regret.

10. History of mutual funds
 M.F was first introduced in USA in 1940, now
has 14000 M.F worth of nine trillion dollars.
 Europe has 30,000 investment of 6 trillion
dollars.
 Asia included 11000 has investment of 2
trillions.
 Africa M.F included 52 billion dollars.
 Pakistan M.F have worth of 150 billion rupees.
 M.F industry was first introduced by
government in 1962 in form of NIT.
 NIT is the largest M.F has almost 70 billion
rupees.

11. Gap analysis
Focus at research on the financial markets after
2008 financial crises.
Lehman brother’s positive correlation in mutual
funds.
recently no study has been conducted in Pakistan
evaluating performance.
Performance is the major indicator in the decision
making.

12. Literature review:
1. Anna Mitsios (2006),
investigate intraday herding in wide market
and industry in austrilian equity
markets.
2. Tingyu Zo and Neng La, hong kong (2007),
separate stock in two portfolios, property
versus non property stocks.
3. Scharfistine and stein (1990). Studied
intentional and unintentional herding.

13. Literature review
4. Ching li and tan (2010).
Examined herding in aggregate market of
share investor ‘A’ and share investor ‘B’.
5. Glesona mathrub and Peterson (2004).
Analyzed herding in higher markets
moments.
6. Shoo and sun(2010).
Studied institutional investors behavior.

14. Literature review
 Nadine Gatzerts et.al 2013,
 Andrea et.al. 2014,
 C.Edward et.al. 2012,
 M Reza et.al.2010,
 performance and risk as a major factor in
MFs.
 Others, hummaira et.al.2012,
 Aamir shah et.al. 2005, obtained results by
performance evaluation.

15. Theoretical Framework
Effective
investment
decisions in M.F
Performance
evalaution
Mutual funds
herding

16. Research Design
 Pooled variance techniques.
 Regression model.
 Descriptive statistics.
ANOVA.
 Hypothesis. H1 (-), H2 (+)

17. Research design
 Performance is measured with the following
models;
 Sharpe ratio
 Treynor ratio
 Jensen alpha

18. Sharpe ratio

19. Treynor ratio

20. Jensen differential

21. Research design
 Population:
 ISE, Data collection from secondary sources;
 Annual reports , Asset management
companies, stock exchanges, SECP and
related sites.
 NAV of close and open end MF has taken.
 Business recorder.
 Sample:
 Twenty companies mutual funds.
 Adaptive study.