Performance Evaluation of Collective Investment Schemes in Ghana

Abstract

The performance of collective investment schemes (CISs) provides investors with an opportunity to know how well or otherwise CISs perform before choosing a CIS to invest in. Raw returns are usually reported by CIS managers in Ghana, mostly in their annual reports. However, higher raw returns do not necessarily reflect superior performance.  A risk – adjusted performance measure can better reflect the performance of a collective investment scheme. This study therefore evaluated the performance of ten CISs in Ghana in terms of average returns and on a risk – adjusted basis using the classic approaches – the Sharpe ratio, the Treynor index and the Jensen alpha over the period 2007 – 2012. It also compared the performances of equity, money market and balanced CIS over the period. Data were hand – collected from CIS reports. The results showed that CISs in Ghana have performed poorly over the period 2007 – 2012 across the three performance measures. The balanced funds performed better than the money market and equity CISs.