A STUDY ON PERFORMANCE OF MUTUAL FUNDS IN FRAMEWORK OF RISK & RETURN

Abstract

The economic and therefore the personal finance landscape have changed drastically since the first 90’s because the Indian Economy opened and financial sector reforms were undertaken. Considerable percentage of the Urban India now has a higher household income and disposable income. Interest rates on debt instruments have fallen from as high as 12% in the 90’s to 7% - 8% today whereas inflation is also in the same range while equity still on an average giving return around 15% -20%. Moreover, current global economic environment continues to remain weak with the euro zone credit crisis adversely impacting global economic growth. The cost of living and aspirations have gone up putting pressure on income, which has got to generate the simplest return under the given circumstances. Moreover, the increasing complexity of monetary products makes it imperative for a private to hunt experts’ opinion in managing one’s finances during a disciplined manner. Researches on this regard have been undertaken previously but the comparative techniques were either dependent on Standard deviation or one of the three ratios which are Treynor, Sharpe and Jenson’s measure. This study is done on 5 Large cap funds traded on NSE and the risk and return are compared considering all the three measures mentioned above. With this backdrop in mind, this report titled “A Study on Performance of Mutual Fund Schemes in Framework of Risk and Return” takes a look at the performance of some mutual funds presently in the market. I believe this report will provide a valuable insight into the performance of the mutual funds, to have knowledge about its risk-return spectrum.