Mutual Fund Performance:An Evaluation of Select Growth Funds in India

This study attempts to evaluate the performance of mutual funds on the basis of rate of return as well as risk-adjusted methods. The performance of the mutual funds are compared with the risk-free returns as well as the benchmark index (BSE100), which is taken as a proxy for market returns. The rate of return analysis performed on the sample of equity funds showed that all the mutual funds except one in the sample, earned returns in excess of the risk-free rate of return offered by 364-day Treasury Bill (T-bill). The comparison of rates of return of the benchmark index and the sample of mutual funds indicates that majority of the equity mutual funds (included in the sample) have outperformed the benchmark. However, when the mean return of the entire sample is considered, it does not show significantly different return from that of the benchmark BSE 100 index. An analysis based on risk-adjusted performance, however, shows a different picture where most of the funds (around 70%) in the sample have posted positive and better Sharpe as well as Treynor’s ratio compared to the benchmark BSE 100 index. The study, thus, although provides some evidence of satisfactory performance in terms of returns generated per unit of risk, yet, a conclusive statement regarding the capabilities of mutual fund managers is still elusive.