Performance of Arbitrage Mutual Funds: Risk, Fund Size and Market Sentiments – Evidence from India

Effect of Fund Size on the Performance of Balanced Mutual Funds: An Empirical Study in the Indian Context

Investment Styles and Performance of Mutual Funds in India

PurposeThe present study tries to explore the various fund attributes that influence the mutual fund performance. Further, study examined the effect of mutual fund attributes namely, Net Asset Value (NAV), Portfolio turnover ratio (PTR), fund size (AUM), expense ratio (ExpR) and fund age (Age) on mutual fund's performance using gross return and risk-adjusted performance measures.Design/methodology/approachThe study evaluated balanced panel data (short panel) comprising 81 Indian equity mutual fund schemes for the period of 2013–2019. The study estimated relationship between fund attributes (Net asset value, Portfolio turnover ratio, Fund age, fund size and Expense ratio) and fund performance (using gross return and risk-adjusted performance measures), through panel data regression using fixed-effects model as suggested by Hausman specification test on transformed data (due to high multicollinearity), with cluster-robust estimators due to the presence of heteroskedasticity in the model.FindingsThe findings of the study suggested that using gross return as fund performance measure, PTR, NAV, AUM, Age exhibit significant relationship with the fund performance whereas using risk-adjusted performance measures (Treynor ratio and Jensen alpha) NAV and ExpR significantly influences the fund performance. Identification of the significant relationship between fund characteristics and fund performance offers valuable insights to the investors and fund managers for rationally managing their portfolio with the ultimate objective of the wealth maximization.Research limitations/implicationsThe study considered only 81 equity mutual fund schemes. Some of the data were not available at the time of the study due to the policy of the company. The present study contributes significantly in examining the expected association between fund attributes and fund performance in the context of Indian mutual fund industry where this relationship were explored less.Practical implicationsThe findings of the present study will help the investors to take the rational investment decision with the ultimate objective of maximum return with minimal risk. The findings also offer significant germane to the stakeholders in making rational decision-making process.Originality/valueThere is dearth of study concerning the relationship between mutual fund characteristics and fund performance with respect to Indian mutual fund industry. Therefore, study provides valuable insights to the area of the portfolio selection and management with respect to Indian mutual funds.

This article presents a comprehensive analysis aligned with the first research objective, which aims to evaluate the performance and growth of mutual funds in India. The study is structured into two key segments. The first segment assesses the growth and performance of mutual funds by examining critical indicators such as Asset Under Management (AUM), industry-wide resource mobilization, and the rate of return of top-performing mutual fund schemes. The second segment undertakes a comparative evaluation of mutual fund returns vis-à-vis other widely adopted investment avenues, including Post Office Investment Schemes (POIS), Public Provident Fund (PPF), National Pension Scheme (NPS), and Fixed Deposits (FDs) offered by commercial banks. By juxtaposing mutual funds with these alternatives, the article offers valuable insights into their relative financial performance and investment attractiveness. The findings contribute to a deeper understanding of mutual funds’ role in India’s evolving investment ecosystem

Environmental, Social, and Governance (ESG) investing has gained considerable traction globally, with Indian investors increasingly exploring sustainable investment alternatives. Despite this growing interest, empirical evidence comparing the performance of ESG and non-ESG mutual funds in India remains limited. This study examines the comparative performance of ESG and non-ESG mutual funds in India over the period January 2022 to March 2025. Using secondary data obtained from the Association of Mutual Funds in India (AMFI) and the National Stock Exchange (NSE), six ESG funds were paired with comparable non-ESG funds from the same Asset Management Companies (AMCs) based on Assets Under Management (AUM). Fund performance was evaluated using annualized returns, standard deviation, beta, Sharpe Ratio, Treynor Ratio, and Jensen’s Alpha. The results indicate that ESG funds deliver performance comparable to traditional funds, with relatively stable risk-adjusted returns. The findings suggest that ESG mutual funds can serve as a viable and sustainable investment alternative for Indian investors without significantly compromising financial performance.

The outbreak situation of the COVID-2019 pandemic is an Unpredictable shock to the world economy. World Economy faces the slowdown of share market prices, especially the value of mutual fund value decreases. Companies and Businessmen primarily invested in the mutual funds to play a safer role, modify their risk into the return, and increase the Net Assets Value (NAV). This study attempts to describe the state of mutual funds in India during this COVID 2019 period. Thus the performance of mutual funds when compared with before and during COVID 2019, the proposed model specifies on testing the performance of mutual funds both in the public and private sectors and attains to access the impact of COVID 2019 on mutual funds. The author has used correlation for finding out the relation of COVID 2019 and Mutual Funds. This paper mainly addresses the causes of investors during economic fluctuation and the return of top mutual companies by comparing the return of 1 year and during these last three months. COVID 2019 is not only on particular sectors; it affects almost every sector like construction, manufacturing, business, agriculture. While all the sectors are affected by COVID 2019 pandemics, it hits the society and the economy; once the economy comes down, the inflation rate increase, the Forex rate will increase, and it affects our whole country. In this paper, the author included sectors that are affected and their performance now and how well the different types of funds are performing, which will be helpful for the reader to analyze the affected areas. The paper concluded with the help of a survey and statistical tools whether the investors can make a further payment and hold for some period or continue with the investment whatever situation crisis impacts our economy.KeywordsMutual Funds performance in India during COVID 2019ImpactInvestors situationGrowth of mutual funds in India

The concept of mutual funds in India dates back to the year 1963. The era between 1963 and 1987 marked the existence of only one mutual fund Company in India, namely the Unit Trust of India (UTI), with Rs. 67 billion assets under management (AUM). Few other mutual fund companies entered the mutual fund market later on. The private sector funds started penetrating the fund families during 1993. Kothari Pioneer was the first private sector mutual fund company in India which has now merged with Franklin Templeton. By the end of 1993, the total AUM of the industry was Rs. 470. 04 billion. Just after ten years with private sector penetration, the total assets rose up to Rs. 1218. 05 billion and till 2004, it reached the height of 1540 billion. The total AUM of the mutual fund industry has risen up to 14000 billion in April, 2016. Today there are 43 mutual funds in India offering a number of schemes suited to the needs of different type of customers. It has been noticed that the private sector mutual funds have been taking more risks and have also been able to gain higher returns on an average. This paper tries to highlight the comparative performance of public and private sector mutual funds and also throw light on the scope of the existing potential of the fund market in the face of traditional risk aversion of the investors and huge rise in financial assets.

The concept of mutual funds in India dates back to the year 1963. The era between 1963 and 1987 marked the existence of only one mutual fund Company in India, namely the Unit Trust of India (UTI), with Rs. 67 billion assets under management (AUM). Few other mutual fund companies entered the mutual fund market later on. The private sector funds started penetrating the fund families during 1993. Kothari Pioneer was the first private sector mutual fund company in India which has now merged with Franklin Templeton. By the end of 1993, the total AUM of the industry was Rs. 470. 04 billion. Just after ten years with private sector penetration, the total assets rose up to Rs. 1218. 05 billion and till 2004, it reached the height of 1540 billion. The total AUM of the mutual fund industry has risen up to 14000 billion in April, 2016. Today there are 43 mutual funds in India offering a number of schemes suited to the needs of different type of customers. It has been noticed that the private sector mutual funds have been taking more risks and have also been able to gain higher returns on an average. This paper tries to highlight the comparative performance of public and private sector mutual funds and also throw light on the scope of the existing potential of the fund market in the face of traditional risk aversion of the investors and huge rise in financial assets.

This study examines the performance of equity mutual funds in relation to their benchmark indices, highlighting variations in fund efficiency and management effectiveness. The analysis employs risk-adjusted performance measures, including the Sharpe Ratio, Jensen’s Alpha, and Treynor’s Ratio, to evaluate returns relative to risk. The findings reveal a diverse performance landscape, where some funds demonstrate superior risk-adjusted returns and effective portfolio management, while others exhibit significant underperformance, indicating potential shortcomings in investment strategies and managerial decision-making. The results emphasize the importance of incorporating risk, volatility and managerial skill into mutual fund evaluation. Overall, the study provides valuable insights for investors seeking to optimize portfolio selection and make informed investment decisions within the equity mutual fund segment.

New financial products, advancements in technology, and restructured financial theories during last two decades have contributed significantly to bringing rapid changes in the global financial markets. The Indian financial sector can be seen extending new horizons of growth with reform processes that were initiated in the 1990s,which show a changing pattern of investors’ investment preferences. The growth of innovative mutual fund schemes has proved to be one of the most catalytic in accelerating the investment growth in Indian capital markets. In addition, Indian markets are waiting to outshine in the area of mutual funds as this particular sector has excellent potential due to the scope of formulating new fund schemes that can be a perfect blend of liquidity, low risk, and higher returns. In an effort to check out the performance of mutual funds in India, this study presents a complete analysis of growth of the various sector mutual funds during the period from 1999 to 2009 and further compares private-sector and public-sector funds in terms of risk and return. The study concludes that although the current perception of investors has changed for private-sector mutual funds, the performance of those funds does not vary much from public-sector funds. Further, the results of the study also prove that private-sector funds do not show any additional risk when compared to private-sector funds. <b>TOPICS:</b>Mutual fund performance, style investing, emerging, risk management

The tremendous expansion of mutual fund industry indicates the deeper look into the performance of mutual funds. The objective of this paper is to comparison of performance evaluation models of SBI mutual funds and ICICI mutual funds in India by using the parameters of Sharpe ratio, Treynor ratio and Jensen performance index. Therefore, there is a need to identify the similiarity and uniformity in the ranking of these three models, Kendalls Coefficient of Concordance is used to test the hypothesis at 1% and 5% level of significance.

Recently two significant developments took place in the Indian capital markets: (a) SEBI’s decision making it mandatory for all mutual funds to disclose the scheme returns against a common benchmark index such as Nifty or Sensex and (b) Employee’ Provident Fund Organisation (EPFO) is permitted to invest a part of their funds into stock market through the exchange-traded fund (ETF) route, particularly SBI Sensex and SBI Nifty ETFs. Both the developments are tied by a common concept that stock market indices such as Nifty and Sensex are passive without any statistically significant alpha. In the fund management industry, alpha is a measure of the risk-adjusted excess returns from a portfolio that can be attributed to the stock-picking skills of a fund manager. In this article, an attempt is made to examine for the presence of significant alphas in the returns of both the indices. The results of the study indicate that both the indices have statistically significant excess returns, raising questions on their suitability to act as reference and/or benchmarks for evaluating performance of mutual funds in India. Further, the study examined the returns of Sensex and Nifty index ETFs and observed a statistically significant alpha. The results of the study have important implications not only for the index construction companies but also to the policymakers who are advocating investment of considerable amounts of provident fund money into stock market through ETFs linked to Sensex and Nifty. Index maintenance companies have to re-design the indices so that they remain passive and the EPFO Administration may rethink their decision to invest in the existing ETFs linked to the Sensex and Nifty indices, and should consider constructing a well-diversified stock portfolio that is truly passive so that their mandate to get exposure only to market risk is fulfilled.

This research article explores the impact of social media marketing on promoting investment in mutual funds in India. With the increasing penetration of the internet and the rise of social media platforms, financial institutions are leveraging these channels to engage potential investors. The study investigates the effectiveness of social media marketing strategies in influencing investor behavior, awareness, and decision-making regarding mutual funds. A mixed-method approach was employed, including surveys and interviews with industry experts and investors. This paper explores the application of the Intelligent Designer Assistance System (IDAS) in mutual fund analysis, offering a comprehensive framework for evaluating mutual funds based on key financial metrics. IDAS integrates multiple parameters such as risk levels, return on investment (ROI), cost efficiency, volatility, Sharpe ratio, beta, fund size, and manager tenure, among others, to provide insights that assist investors in making informed decisions. Through the analysis of various fund types, including equity, bond, balanced, and sector funds, this study demonstrates how IDAS can tailor investment recommendations according to individual risk preferences and financial goals. The findings emphasize the importance of aligning investment strategies with factors like fund performance consistency, adaptability to market conditions, and overall cost-effectiveness. This approach enables investors to optimize their portfolios by selecting funds that best match their risk tolerance, return expectations, and sector interests, leading to more strategic and efficient investment choices. This paper investigates the role of social media marketing in promoting investments in New Fund Offers (NFOs) within the Indian mutual fund landscape. As financial institutions increasingly leverage social media platforms for marketing, understanding their effectiveness in influencing investor behavior becomes crucial. This study employs a mixed-method approach, including quantitative surveys and qualitative interviews, to analyze how social media impacts awareness, engagement, and investment decisions related to NFOs.

Does Fund Size Affect the Performance of Equity Mutual Funds? An Empirical Study in the Indian Context

Performance of Active and Passive Mutual Funds in India — Pre and During COVID