| Summary: | This document evaluates the market; timing records of professional portfolio managers. It concentrates on measuring the market timing. activities of mutual fund portfolio managers, with particular emphasis on the role of liquid asset management. It begins by demonstrating that the industry's growth from 1960 through 1971 was characterized by an increasing propensity for capital gains rather than investment income. It is also shown that the managers rarely hold more than two percent of their assets in non-yielding forms such as cash and demand deposits. Instead, they hold sizeable amounts of low risk instruments such as U.S. Government Bills, Notes, and Bonds as well as high-grade commercial paper.
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