The effect of diversification on portfolio returns of mutual funds in Kenya
The objective of this study was to determine the effect of diversification on portfolio return of mutual funds in Kenya. The study took a descriptive research design approach. The study entailed a sample of 7 mutual funds that had balanced funds with complete records for the year 2013 for a period of 52 weeks. The study used secondary data sources available at the NSE or Capital Market Authority offices. The study used the multiple linear regression equation and the method of estimation was Ordinary Least Squares (OLS) so as to establish the effect of diversification on portfolio returns of mutual funds in Kenya. The study revealed that diversification affects the portfolio returns of mutual funds in Kenya. The study found that diversification positively influences the portfolio returns. There is need for fund managers to actively craft there investment strategy and impress diversification so that they can be able to improve the portfolio returns of the fund holders.