Comparative Analysis of Technology and Conventional Mutual Funds’ Performance during Financial Crisis and Non-crisis Periods

Abstract

Within the last couple of decades, technology has completely changed our way of living; i.e. the way we think, travel, work and conduct daily routines. In this thesis we will examine the performance of technology- and conventional mutual funds in the global market through the last 18 years. In doing so, we will look at previous bubble-burst and the possibility of a “peso problem” in today’s technology sector. More specifically, the study aims to investigate whether the innovations and popularity of technology mutual funds enable the funds to perform better compared to conventional mutual funds in terms of risk, return and alpha determinant. Our study found that technology funds yielded slightly lower risk-adjusted returns and alpha values through the first sub-period, as a result of the aftermath from dot-com bubble. During the next sub-period involving the era of financial crisis, technology funds performed solid in all measures compared to their counterparts, with significant higher alpha values and risk-adjusted returns. The same tendencies continued through our last sub-period from 2011 until 2019, resulting in a total period with solid performance from the combined technology sector.