Abstract
In this paper, an attempt has been made to analyses the performance of equity mutual funds industry against risk free rate and benchmarks return over the five years. The samples consists 10 growths oriented- open ended- equity mutual fund schemes belong to 5 public and 2 private mutual fund companies. Results are tested through risk-return analysis, Coefficient of Variation, Treynor’s ratio, Sharp’s ratio, Jensen’s measure, Fama’s measure and Regression analysis. The data used is monthly closing NAVs and benchmark market index closing for the study period of April 2007 to March 2012. The risk return analysisrevealed that out of 10 schemes 3 have underperform the market, 7 are found to havelower total risk than the market and all the schemes have given returns higher than risk free rates. The Treynor ratio of all the mutual funds scheme are over perform the benchmark market index and Sharpe ratio of 3 mutual funds scheme underperform the benchmark market index. The result of regression analysis suggests that benchmark market return index has statistically significant impact on mutual fund return at 5% level of significance
Highlights
A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests in stocks, bonds, short term money market instrument and other securities
Mutual funds have become a widely popular and effective way for investors to participate in financial markets in an easy, low cost fashion, while muting risk features by spreading the investment across different types of securities, called as diversification
The statistics revealed that the world mutual fund industry managed financial assets of $ 25.59 trillion and the number of mutual funds has grown to 73343 funds worldwide at the end of March 2012, including 28358 equity funds contribute nearby 38% of total scheme
Summary
A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests in stocks, bonds, short term money market instrument and other securities. Securities Exchange and Board of India (SEBI), regulatory body for Indian capital market, formulated comprehensive regulatory framework for Mutual funds in 1993 and allowed private corporate bodies to launch mutual fund schemes. Opening up the industry door to private sector banks and financial institution in 1993 had ushered in a new era in the evolution of Indian mutual fund sector. Foreign asset management companies were allowed to set up their funds. The industry has recorded a compound annual growth rate of 15.43% in asset under management over the period of March 2007 to March 2012, at the same time when stock market and financial institution witnessed the heavy crushed by financial crisis
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