Performance evaluation of mutual fund

Abstract

Mutual funds are the fastest growing segment of the financial service industry. It has emerged as a main vehicle of investment and important source of returns for small investors on their investments. The volatility in the capital market and reduction of interest rates on deposits diverted a large number of small investors towards mutual funds. The present study aims to evaluate the performance of mutual fund schemes through risk return analysis. The paper is based on secondary data and for each mutual fund schemes in the sample, the returns have been calculated taking weekly-end Net Asset Value since from 1998 to 2001. The study considers interest rates on bank deposits as risk free asset. The risk return analysis such as Sharpe, Jenson and Treynor measures has been used to find performance evaluation of mutual fund schemes. The Sharpe ratio of Magnum sector pharma, Magnum multiplier plus schemes were identified as greater than Benchmark. The Treynor ratio of SBI global fund, Magnum sector pharma, Canexpro, Magnum sector umbrella and Canbonus were performed better than benchmark. The Alpha value of Canexpro is positive, thus it signifies that it has performed well in the market.