A COMPARATIVE ANALYSIS OF

MUTUAL FUND SCHEMES IN INDIA

Introduction:

Mutual Funds have become a widely popular and effective

way for investors to participate in financial markets in an
easy, low-cost fashion, while muting risk characteristics by
spreading the investment across different types of
securities, also known as diversification. It can play a
central role in an individual's investment strategy. They
offer the potential for capital growth and income through
investment performance, dividends and distributions under
the guidance of a portfolio manager who makes investment
decisions on behalf of mutual fund unit holders.
Over the past decade, mutual funds have increasingly
become the investors vehicle of choice for long-term
investment. It becomes pertinent to study the performance
of the mutual fund. The relation between risk-return
determines the performance of a mutual fund scheme.
 As risk is commensurate with return, therefore, providing maximum return
on the investment made within the acceptable associated risk level helps
in segregating the better performers from the laggards. Many asset
management companies are working in India, so it is necessary to study
the performance of its which may be useful for the investors to select the
right mutual fund.
A mutual fund is a common pool of money into which investors with
common investment objectives place their contributions that are to be
invested, in accordance with the stated objective of the scheme. The
investment manager invests the money collected into assets that are
defined by the stated objective of the scheme. For example, an Equity
fund would invest in Equity and Equity related instruments and a Debt
fund would invest in Bonds, Debentures, and Gilts etc. The most important
variable that decides whether you will meet your target or not is the
nature of the actual investments. The first step in getting this right is to
decide what kind of asset class you need to invest in. Asset class refers to
debt or equity. This is the primary decision you will have to make.
LITERATURE REVIEW:

Sapar & Narayan(2003) examines the performance of Indian mutual

funds in a bear market through relative performance index, risk-return
analysis, Treynor's ratio, Sharp's ratio, Sharp's measure, Jensen's
measure, and Fama's measure with a sample of 269 open ended
schemes (out of total schemes of 433). The results of performance
measures suggest that most of the mutual fund schemes in the sample
of 58 were able to satisfy investor's expectations by giving excess
returns over expected returns based on both premium for systematic
risk and total risk.
Rao D. N (2006) studied the financial performance of select open-ended
equity mutual fund schemes for the period 1st April 2005 - 31st March
2006 pertaining to the two dominant investment styles and tested the
hypothesis whether the differences in performance are statistically
significant. The analysis indicated that growth plans have generated
higher returns than that of dividend plans but at a higher risk studied
classified the 419 open-ended equity mutual fund schemes into six
distinct investment styles.
 Agrawal Deepak & Patidar Deepak (2009) studied the empirically testing on
the basis of fund manager performance and analyzing data at the fund-
manager and fund-investor levels. The study revealed that the performance
is affected by the saving and investment habits of the people and at the
second side the confidence and loyalty of the fund Manager and rewards-
affects the performance of the MF industry in India.
Mehta Sushilkumar (2010) analyze the performance of mutual fund schemes
of SBI and UTI and found out that SBI schemes have performed better then
the UTI in the year 2007-2008.
Selvam et.al (2011) studied the risk and return relationship of Indian mutual
fund schemes. The study found out that out of thirty five sample schemes,
eleven showed significant tvalues and all other twenty four sample schemes
did not prove significant relationship between the risk and return. According
to t-alpha values, majority (thirty two) of the sample schemes' returns were
not significantly different from their market returns and very few number of
sample schemes' returns were significantly different from their market
returns during the study period.

Jayadev (1996) evaluated the performance of two growth-oriented
mutual funds namely Mastergain and Magnum express by using monthly
returns. Jensen, Sharpe and Treynor measures have been applied in the
study and the pointed out that according to Jensen and Treynor measure
Mastergain have performed better and the performance of Magnum was
poor according to all three measures.
Afza and Rauf (2009) in their study of open-ended Pakistani mutual funds

performance using the quarterly data for the period of 1996-2006. The
study measure the fund performance by using Sharpe ratio with the help
of pooled time-series and cross sectional data and also focused on
different attributes such as fund size, expenses, age, turnover and
liquidity. The results found significant impact on fund performance.
Debasish (2009) studied the performance of selected schemes of mutual

funds based on risk and return models and measures. The study covered
the period from April 1996 to March 2005 (nine years). The study
revealed that Franklin Templeton and UTI were the best performers and
Birla Sun life, HDFC and LIC mutual funds showed poor performance.
 Ali, Naseem and Rehman (2010) in their study examined the performance of 10
mutual funds in which 5 were conventional and 5 were Islamic for the period from
2006 to 2008 by using Sharpe and Treynor measures. The results found that the
funds of Pakistan were able to add more value either conventional or Islamic. The
study also found that some of the funds were underperformed, so these funds were
facing diversification problems during the study period.
Garg (2011) examined the performance of top ten mutual funds that was selected
on the basis of previous years return. The study analyzed the performance on the
basis of return, standard deviation, beta as well as Treynor, Jensen and Sharpe
indexes. The study also used Carharts four-factor model for analyze the performance
of mutual funds. The results revealed that Reliance Regular Saving Scheme Fund had
achieved the highest final score and Canara Robeco Infra had achieved the lowest
final score in the one year category.
Sondhi and Jain (2010) examined the market risk and investment performance of
equity mutual funds in India. The study used a sample of 36 equity fund for a period
of 3 years. The study examined whether high beta of funds have actually produced
high returns over the study period. The study also examined that open-ended or
close ended categories, size of fund and the ownership pattern significantly affect
risk-adjusted investment performance of equity fund
OBJECTIVES OF THE STUDY
1. To evaluate and compare the performance of equity
diversified mutual fund schemes of selected companies
2. To compare the performance of equity diversified mutual

fund schemes of selected companies vis--vis the market

3. To examine the performance of selected schemes by

using the portfolio performance evaluation models namely

Sharpe, Treynor and Jensen.
4. To examine the performance of selected schemes on the

basis of risk and return and compare the performance of

selected schemes with benchmark index to see whether
the scheme is outperforming or underperforming the
benchmark.
RESEARCH METHODOLOGY
To examine the mutual fund schemes performance, 29
schemes were selected at random basis. Monthly NAV of
different schemes have been used in this study for the
period of six years i.e., April 2010 to March 2016(six
years). BSE-Sensex has been used for market portfolio. In
the study the monthly yield on 91-day Treasury bills have
been used as risk-free rate. The study was mainly
secondary data based. Data regarding NAV were obtained
from the web site of www.mutualfundindia.com and
www.amfiindia.com for the period of April 2010 to March
2016. Data for monthly closing price for the benchmark
index (BSE-Sensex) were collected from web site of
Bombay Stock Exchange (www.bseindia.com).