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Does Portfolio Diversification Affect Performance of Balanced Mutual Funds in Kenya?
Literature provides conflicting results on the effect of diversification on performance of mutual funds with some studies showing a positive relationship (Markowitz, 1952; Muriithi, 2005; Kagunga, 2010), others negative (Chang & Elyasiani, 2008; Fiegenbaum & Thomas, 1998) and still others showing that there is no relationship between the two variables (Loeb, 1950). It is with this background that this study sought to establish the effect of diversification on performance of mutual funds in Kenya.
