PORTFOLIO COMPOSITION AND FINANCIAL PERFORMANCE OF INVESTMENT COMPANIES LISTED AT THE NAIROBI SECURITIES EXCHANGE, KENYA
PORTFOLIO COMPOSITION AND FINANCIAL PERFORMANCE OF INVESTMENT COMPANIES LISTED AT THE NAIROBI SECURITIES EXCHANGE, KENYA
Cheruiyot K. Solomon - Masters of Science in Finance, Kenyatta University, Kenya
Dr. Moses Odhiambo Aluoch (PhD) - Department of Accounting and Finance, School of Business, Economics and Tourism, Kenyatta University, Kenya
Dr. Peter Ndungu (PhD) - Department of Accounting and Finance, School of Business, Economics and Tourism, Kenyatta University, Kenya
ABSTRACT
Stakeholder choices are greatly swayed by potential gains from investment. They generally lean towards opportunities that promise heftier rewards rather than those that offer lower returns. Firms in the investment sector pledged greater profits, but they have yet to uphold their commitment. The downward trajectory in performance observed in investment firms enlisted on the Nairobi Securities Exchange shoulders much of the blame for this. By scrutinizing the interplay between the fiscal performance of publicly traded investment ventures in Kenya and the makeup of investment portfolios, this inquiry sought to furnish a response to this query. The focal point of this inquiry was to assess the influence of distinct asset classes on the profit margins of investment enterprises featured on the Nairobi Securities Exchange. Five investment firms listed on the Nairobi Securities Exchange were the subjects under investigation. To ensure a holistic grasp of the topic at hand, the research melded principles from other theories, including the Modern Portfolio Theory and the Black-Litterman Theory, to appraise a company's holdings. The scrutiny adopted a theoretical model to assess a company's holdings. The examination grounded itself on positivist philosophical tenets and a causal research approach. The quintet of investment enterprises listed on the Nairobi Securities Exchange constituted the intended recipients of this inquiry, which was executed using secondary data procured from the exchange and the websites of the relevant investment firm. The study was slated to commence in 2015 and conclude after an eight-year span, terminating in 2022. To ensure the research was conducted within the bounds of legality and ethics, Kenyatta University and the National Commission for Science, Technology, and Innovation both provided their sanction for the study to gather data. In the data analysis phase, both descriptive and inferential statistics were brought into play. Descriptive statistics, including standard deviation, mean, and median, were presented in tables and charts. In terms of inferential statistics, panel regression analysis and correlation were applied. Prior to executing the panel regression analysis, diagnostic tests were administered to affirm the assumptions of the panel model. The inquiry unearthed a substantial correlation between returns on investment (ROI) and equity fund investments. Financial performance and investments in mutual funds exhibited a modest but constructive correlation. Bond and real estate investments were found to have no appreciable effect on the return on investment for listed investment enterprises. To enhance their financial performance and more effectively mitigate their firm's investment risk, the study recommended that investment company management uphold a well-balanced portfolio of investments. In an endeavor to refine their financial performance, investment firms should give heed to equity investments. This necessitated investing in dependable counters with superior dividend payout and appreciation potential.
