Mutual Funds

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IRJC
International Journal of Marketing, Financial Services & Management Research Vol.1 Issue 7, July 2012, ISSN 2277 3622

A COMPARATIVE ANALYSIS OF MUTUAL FUND SCHEMES IN INDIA
DR. SARITA BAHL*; MEENAKSHI RANI**
*Associate Professor, P.G Department of Commerce and Management, Arya College, Ludhiana. **Research Scholar, Department of Commerce, Kurukshetra University, Kurukshetra, Haryana.

ABSTRACT The present paper investigates the performance of 29 open-ended, growth-oriented equity schemes for the period from April 2005 to March 2011 (six years) of transition economy. Monthly NAV of different schemes have been used to calculate the returns from the fund schemes. BSE-sensex has been used for market portfolio. The historical performance of the selected schemes were evaluated on the basis of Sharpe, Treynor, and Jensen’s measure whose results will be useful for investors for taking better investment decisions. The study revealed that 14 out of 29 (48.28 percent) sample mutual fund schemes had outperformed the benchmark return. The results also showed that some of the schemes had underperformed, these schemes were facing the diversification problem. In the study, the Sharpe ratio was positive for all schemes which showed that funds were providing returns greater than risk free rate. Results of Jensen measure revealed that 19 out of 29 (65.52 percent) schemes were showed positive alpha which indicated superior performance of the schemes. KEYWORDS: Jensen measure, Mutual funds, performance evaluation, Sharpe measure, Treynor measure. ______________________________________________________________________________ I. INTRODUCTION Many of the financial instruments mutual fund is one of the most attractive financial investment instrument that plays a vital role in the economy of a country. Mutual fund schemes provides new opportunities for investors. Mutual fund Industry was introduced in India 1963 with the formation of Unit Trust of India. During the last few years many extraordinary and rapid changes have been seen in the Mutual fund industry. Therefore, due to the changed environment it becomes important to investigate the mutual fund performance. The need for evaluating the performance of mutual fund schemes in India to see whether the mutual fund schemes are outperforming or underperforming than the benchmark and to see the competency of schemes to make out a strong case for investment. The present paper investigates the performance of openended, growth-oriented equity schemes. Open-ended mutual fund schemes are those which don’t have a fixed maturity, not listed in the stock exchange and these schemes offer new unit for sale and ready to buy any time. The success of any scheme depends upon the competence of the www.indianresearchjournals.com

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IRJC
International Journal of Marketing, Financial Services & Management Research Vol.1 Issue 7, July 2012, ISSN 2277 3622

management and its soundness. The numbers of open-ended schemes have been increased from the last few years except 2009 (see table 1). The reason may be of decreasing open-ended schemes in March 2009 are the global financial crisis. According to AMFI (March 2011), there were about 1095 schemes in India, out of which 727 (66.39%) were open-ended. The growth of open-ended and close-ended mutual fund schemes in percentage term are presented in Table 1. TABLE 1. GROWTH OF MUTUAL FUND SCHEMES IN INDIA Schemes Open-ended Closeended Total March 2006 463 (78.21) 129 (21.79) 592 (100) March 2007 480 (64) 270 (36) 750 (100) March 2008 592 (61.92) 364 (38.08) 956 (100) March 2009 589 (63.13) 344 (36.87) 933 (100) March 2010 641 (76.04) 202 (23.96) 843 (100) March 2011 727 (66.39) 368 (33.61) 1095 (100)

Note: Figures in parentheses indicate the percentages Source: Data Compiled from AMFI (Association of Mutual Funds of India) The rest of paper is organized as follows: In Section II summarize previous studies related to mutual funds performance. Section...
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