Performance of Indian Mutual Funds with Special Reference to Evaluation of their Reliability

Abstract

In the contemporary world, many fast mushrooming financial institutions are, offering new products and services to the investors. A proper evaluation measure will get rid of the confusion and help investors to decide the relatively better investment in various mutual fund schemes. In this paper, an attempt has been made to examine the components and sources of investment performance of various schemes of Mutual funds which are floated in the market. The objective of this study is to evaluate the performance of Indian Mutual Fund Schemes through relative performance index (RPI), risk- return analysis, Treynor's ratio. Sharpe's ratio, Jensen's measure, and Fama's measure. The study covers a sample of 320 schemes of 37 Fund houses for the purpose of performance evaluation on Non-probability Convenience Sampling basis which covers in all 14 types of fund classes for the time period of February 2006- January 201. The empirical result reported here reveal the fact that the mutual funds were not able to compensate the investors for the additional risk that they have taken by investing in the mutual funds. The results of performance measures suggest that out sample of 320 schemes only 90 were able to satisfy investor expectations by giving excess returns over expected returns based on both premium for systematic risk and total risk.