Visual Analysis of Mutual Fund Performance

Mutual funds are probably the most important investment instruments for investors. Their performance is mainly affected by their characteristics, such as asset size, turnover and fee structure. It is thus of the investors´ highest priorities to understand the relation between fund performance and these properties. Typically, financial researchers use the linear regression technique to statistically assess the relation from massive fund performance data. Unfortunately, the prevailing methods may be confounded by the existence of on-linearity and outliers, and give conflicting conclusions. In this paper, we propose a visualization-based method to improve the mutual fund analysis, where a new visual analytical tool, the density-based distribution map, is applied. The new visual representations greatly help to understand the critical relations, reveal the deficiency of current analytical algorithms, and support mutual funds selection. The tool is used to perform an expert financial analysis, and establish a fund selection strategy from a real-world database of the US stock funds. Our method gains the admiration and support from professionals in the finance field, they embrace it as a potential investment analysis tool for mutual fund managers, financial planners, and investors.