The Effect of Portfolio Management Strategies Of The Financial Performance of the Unit Trusts Listed At The Nairobi Securities Exchange

Abstract

The study sought to determine the effect of portfolio management strategies on the financial performance of the Unit Trusts listed on the NSE. To achieve this objective, the investigation used both correlational and descriptive research designs. The target population for this investigation were the 56 Unit trusts registered in the NSE. The financial information to analyze comprised of five years from the year of income 2015 to 2019. Inferential statistics was used to ascertain an underlying influence linking predictor variables to the output variable. Findings from the regression analysis showed that 4% of the variations in ROA was due to passive management portfolio, active management portfolio, firm size, leverage and inflation rate. This implied that 96% of the variation in ROA was due to other factors. Findings from the ANOVA showed that the model fitted with passive management portfolio, active management portfolio, firm size, leverage and inflation rate was a good fit and statistically significant to predict ROA. Further, results from the regression analysis pointed out that passive management portfolio, active management portfolio, firm size and leverage had positive impact on ROA as indicated by the correlation coefficient of 0.190. The study also concluded that portfolio management strategies had a negative impact on the ROA of the firm. The study recommends that the various unit trusts in NSE have or adopt portfolio management strategies to enhance firm performance. The study also recommends that for companies to enhance performance of portfolios, by having in place effective systems to match investment selection to an individual’s risk objectives, and risk tolerance These systems utilize data to guide investment decisions and ensuring that sound investments would lead to an increase in portfolio. The study also recommends that the government through central Bank of Kenya come up with rigorous policies that will help curb inflation in the economy. With inflation in check investments of the companies would not be adverse affected by a struggling economy.