Performance Evaluation of Equity Based Mutual Funds in India

Abstract

The recent financial scandals have made investors wary investing in stock markets. Since then many retail investors are adopting a very cautious approach. Many have become conservative and are using mutual fund route to invest in the market. The Mutual Fund inflows however are beginning to pick up off late with the good performance of Equity Funds. The Balanced Funds are once again increasing their equity proportions anticipating a bull run. The recently introduced benchmarks for Growth Funds have finally provided investors a tool to judge the performance of these flexible funds. Earlier there were benchmarks only for Income Funds. Now SEBI (Securities and Exchange Board of India) along with CRISIL and other research agencies like Value Research have come up with a benchmark specially designed for Growth Funds. These benchmark indices can be used to judge their performance and give the investors accurate data to help them choose the best performing fund to invest their valuable savings in such a volatile stock market scenario prevailing right now in India.

This study provides an insight to investors, as to how to evaluate the performance of Growth Funds in the Indian Mutual Fund industry, and choose the best performing fund. This study has considered top ten mutual funds in India for analyzing the performance. For evaluating their performance market index, Treynor's measure and Sharpe's measure are considered. The selected fund for the study is pure equity fund, so that the data can be analysed completely to get the desired results. The Statistical Tools like Standard Deviation and Beta are used to evaluate the Risk&Return for the individual investors.