Jørgensen, Sebastian Pinstrup

Pedersen, Emil Sejer

Rud, Malthe Thomas

Abstract This project attempts to define the value of danish active mutual funds through analysis of rational choice, behavioral finance, and danish portfolio manager interviews. It does so by first defining how rational choice and behavioural finance define the value of mutual funds, secondly going through the literature and see if these values exist, and thirdly interviewing 2 portfolio managers of large danish active mutual funds to try and find how they value mutual funds, and how their understandings fit with rational choice theory and behavioural finance. Our findings was that rational choice defines the value of mutual funds as profits, with a few exceptions, and that behavioral finance defines value differently depending on the individual preferences, and knowledge processes. Our literature review shows no sign of active mutual funds being able to make excess risk adjusted return, and held together with our content analysis, there seems to be nothing pointing towards excess risk adjusted returns. Our interview analysis shows that the portfolio managers incorporate parts of both rational choice and behavioral finance. That several factors seemingly could be the explanation, and that they need further research to clarify the relation. Abstract This project attempts to define the value of danish active mutual funds through analysis of rational choice, behavioral finance, and danish portfolio manager interviews. It does so by first defining how rational choice and behavioural finance define the value of mutual funds, secondly going through the literature and see if these values exist, and thirdly interviewing 2 portfolio managers of large danish active mutual funds to try and find how they value mutual funds, and how their understandings fit with rational choice theory and behavioural finance. Our findings was that rational choice defines the value of mutual funds as profits, with a few exceptions, and that behavioral finance defines value differently depending on the individual preferences, and knowledge processes. Our literature review shows no sign of active mutual funds being able to make excess risk adjusted return, and held together with our content analysis, there seems to be nothing pointing towards excess risk adjusted returns. Our interview analysis shows that the portfolio managers incorporate parts of both rational choice and behavioral finance. That several factors seemingly could be the explanation, and that they need further research to clarify the relation. <br/

Defining the Value of Actively Managed Mutual Funds

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Roskilde Universitet