Risk-adjusted performance comparison of South African venture and non-venture companies

• Main Author: Nhundu, Nicholas
• Published: 2015
• Online Access: http://hdl.handle.net/10210/14539

M.Com. (Financial Management) === The risk-return relationship is a paramount component of the optimal investment choice, and is essential to the development of models that seek to explain patterns of stock market predictability. During this study, a risk-return relationship analysis of South African venture capital providing companies was undertaken and relationships to comparable investment vehicles were compared. Risk, returns on investment and risk-adjusted returns on investments of South African venture capital providing companies were compared to small capitalisation, medium capitalisation, top 40 and all-share index companies, based on 10 years of market data. The results for the entire study period were used for analysis, and different market conditions (bull and bear) that existed during the study period were taken into consideration. Results illustrate the highest returns on investments and poor risk-adjusted returns on investment for venture capital providing companies, while small capitalisation companies exhibited the best risk-adjusted returns on investment. It was found that different market conditions do not affect the risk-adjusted returns ranking amongst the observed companies.