Methodological Bases of an Assessment of Financial Reliability and Investment Appeal of Mutual Funds

About the authors:

Nadezhda I. Yashina, Dr. Sci. (Econ.), Professor, Head of the Department of Finance and Credit, National Research State University of Nizhniy Novgorod; paa@hotmail.ru

Yelena V. Poyushcheva, Cand. Sci. (Econ.), Associate Professor, Department of Finance and Credit, National Research State University of Nizhniy Novgorod; evpgg@mail.ru

Artem V. Temnikov, Post-Graduate Student, Department of Finance and Credit, National Research State University of Nizhniy Novgorod; sharki_11@mail.ru

Abstract:

The article deals with the problem of choosing the most efficient investment in the view of the reliability of the unit investment fund. The relevance of the research topic stems from the fact that the qualified investor on the basis of evidence-based methodology for assessing the reliability of mutual funds will be more protected in the securities market. Given the integral evaluation of the reliability of mutual funds and investment optimality, the investor will be able to use more risky financial instruments. The authors propose a system of indicators to measure the financial strength of mutual funds, reflecting their solvency, profitability, and business activity, calculated on the basis of the existing financial statements of mutual funds. They suggest a method of converting these figures to a uniform standardized form and a method for comprehensive assessment of the financial strength of mutual funds on the basis of a standardized composite index. In the current work the authors provide the estimation of the financial reliability of mutual funds on the example of equity and bond funds. Mutual funds on the basis of the total value of standardized indicators of financial reliability are classified. The application of methodology for assessing the reliability of mutual funds, supplemented by an analysis of the investment indicators characterizing the risk, return, and correlation with the stock market mutual funds, allows to identify the most effective ones for investment funds. It should also be noted that professional investors service in the securities market based on a comprehensive assessment of the effectiveness and reliability of investing mutual funds, according to international practice, is cheaper.

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