Index funds in Morocco

Dissertant

Alami, Hisham Idrisi

Thesis advisor

Bin Jilun, Hisham Abd al-Wahhab

University

Al Akhawayn University

Faculty

The School of Business Administration

University Country

Morocco

Degree

Master

Degree Date

2013

English Abstract

Index funds, a popular tool for achieving portfolio diversification, will soon make their appearance in a country that has the ambition of becoming the financial hub of Africa, Morocco.

The purpose of this research is to suggest a fee structure for index funds in Morocco.

We conduct our analysis by comparing the diversification levels of Morocco and South Africa, the biggest and most sophisticated financial market in Africa.

Diversification has always been the best tool to decrease portfolio risk, but how many stocks are needed to achieve diversification? First, using repeated sampling with replacement of monthly stock returns from January 2007 to December 2012 to simulate the average performance of each portfolio size, we evaluate the risk reduction rate in Morocco and South Africa.

Second, we use Statman’s model to conduct a marginal cost versus marginal benefit analysis of increased portfolio diversification to answer the question of how large is a diversified portfolio in South Africa.

We find that more than 200 stocks are needed to achieve diversification in South Africa.

This result is a clear indication that the fee structure of index funds in South Africa is adequate.

We also find that index funds in Morocco should not charge more than 1% management fee per year.

Main Subjects

Financial and Accounting Sciences

Topics

• Management
• Investments
• Morocco
• South Africa

No. of Pages

37

Table of Contents

• APA
• MLA
• AMA

Language

English

Data Type

Arab Theses

Record ID

BIM-628106