Abstract
In the backdrop of liberalization and private participation in the Indian mutual fund industry, the challenge to survive and retain investors' confidence has been a prime concern for fund managers. For small investors who do not have the time or the expertise to take direct investment decision in equities successfully, the alternative is to invest in mutual funds. Performance of the mutual fund products become more complex in the context of accommodating both return and risk measurements while giving due importance to investment objectives. In this paper, an attempt has been made to study the performance of selected schemes of mutual funds based on risk-return relationship models and measures. A total of 23 schemes offered by six private sector mutual funds and three public sector mutual funds have been studied over the time period from April 1996 to March 2009 (thirteen years). The analysis has been made on the basis of mean return, beta risk, coefficient of determination, Sharpe ratio, Treynor ratio and Jensen Alpha. The overall analysis finds Franklin Templeton and UTI being the best performers, and Biria SunLife, HDFC and LIC mutual funds showing poor below-average performance when measured against the risk-return relationship models.
Highlights
Growth and developments of various mutual funds products in Indian capital market has proved to be one of the most catalytic instruments in generating momentous investment growrth in the capital market
Ii) To find out those mutual fund schemes offering the advantages of diversification along with adequate systematic risk compared to market beta risk
The various measures of risk, return and portfolio performance used in the present study are presented below: 5.1 Measures of Return The returns are computed on the basis of the Net Asset Value (NAV) of the different schemes and returns in the market index are calculated on basis of National Stock Exchange (NSE) Nifty on the respective date
Summary
Growth and developments of various mutual funds products in Indian capital market has proved to be one of the most catalytic instruments in generating momentous investment growrth in the capital market. In this context, close monitoring and evaluation of mutual funds has become essential. With emphasis on increase in domestic savings and improvement in deployment of investment through markets, the need and scope for mutual fund operation has increased tremendously. A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. Mutual funds have increasingly become the investor's vehicle of choice for longterm investing
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