Geographic Based Mutual Funds : An Empirical Analysis of the Portfolio Properties of a Hawaii Focused Fund

The economies of various states and geographic areas behave differently than the U.S. economy as a whole. Because of these differences, this paper explores the potential for offering geographically focused mutual funds. Geographically focused mutual funds would allow investors to custom tailor their geographic investments, risk exposure and diversification. In this paper, the development and portfolio properties of a Hawaii based mutual fund are discussed. Hawaii is distinct in its location and has a unique blend of customs and cultures. Firms that operate in Hawaii tend to be quite different than mainland firms. Because of these differences, Hawaii firms have unique portfolio properties that are not present in mainland U.S. firms and thereby provide unique contributions to portfolios. The Hawaii mutual fund proposed here is compared to the Dow Jones Industrial Average, NASDAQ, Russell 2000, S&P 500 and Nikkei 225, over a period of 18 years. Geographic focused mutual funds, specifically in this case a Hawaii Mutual fund, are found to hold substantial promise as an investment tool