The Market Timing Skills of Fund Managers in Less Developing Economies (A Case of Equity and Blended Funds in Kenya)

This paper evaluates the market timing of equity and blended mutual funds in Kenya for the period 1st January 2006 to 31st December 2009. The objective of the study was to examine fund managers’ market timing skill .The research was motivated by the fact that there is limited research on market timing skills of fund managers in less developed economies such as Kenya. The target population was all mutual funds in Kenya. The research used secondary source to collect data which included mutual funds daily returns and annual reports for the period 2005 to 2009. The data was used to calculate the net asset value and hence market timing skills of mutual funds in Kenya. The market timing skills were calculated by models developed by Treynor and Mazuy (1966). Using year by year basis, only blended funds show market timing effort as shown by positive market timing coefficient as compared to equity funds. However, the general finding was that all the market timing skills of fund managers were not significant. The implication is that the fund managers in Kenya have no market timing skills over the research period.