PERFORMANCE OF THE INDIAN MUTUAL FUND INDUSTRY: IMPERICAL STUDY OF DIVERSIFIED EQUITY SCHEMES

Bharatkumar Devrambhai Prajapati, Bharat Manabhai Prajapati

Abstract


Mutual funds are vehicle to mobilize large corpus of money as per committed investment objective. In mutual fund Industry the word ‘fund’ and ‘scheme’ are inter-changeable. Mutual fund offer investor the opportunity to earn an income or build their wealth through professional management of their investible fund irrespective of investor’s expertise. We analyzed performance of diversified equity funds in India during 2003 to 2009 based on the popular measurement techniques, i.e. Sharpe, treynor and Jensen. We drill down market in three phases to have better transparent result based on three Comparison criteria, i.e. Average Return, Standard Deviation, and Return to variability ratio. Study results shows mutual fund outperformed the market during up trend market. Then we have selected top-20 schemes using return based rank of the respective scheme. After we have used spearmen’s rank correlation to measure the relationship between the ranks given by various measurement techniques.

Key Words: Mutual Funds, Fund, Scheme, Investor, Professional management, diversified Equity funds, Measurement techniques, Sharpe, treynor, Jensen, Comparison Criteria, Average Return, Standard Deviation, Return to variability ratio, Spearmen’s rank correlation

References


 Treynor Jack L, “How to Rate Management of Investment Funds”, Harvard Business Review, Vol. 43(1), (1965), pp. 63-75.

 Sharpe, William F “Mutual Fund Performance”, The Journal of Business, Vol. 39(1), (1966), pp.119-138.

 Treynor and Mazuy , “Can Mutual Funds Outguess The Markets” Harvard Business Review, Vol. 44, (1966), pp.131-136.

 Jensen Michael C, “The Performance Of Mutual Funds In The Period 1945-1964”, Journal of Finance, Vol. 23, (1968), pp.389-416

 Fama, “Components of Investment Performance”, Journal of Finance, Vol. 27, (1972), pp.551-567

 Muthappan P K & Damodharan E , “Risk-Adjusted Performance Evaluation of Indian Mutual Funds Schemes”, Finance India, Vol. XX(3), (September 2006), pp.965-983


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ISSN : 2251-1571