Chapter - 2

Literature Review

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SR.NO PARTICULAR PAGE NO.

2.1 Introduction 20

2.2 International Studies 20

2.3 National Studies 23

2.4 Research Gap 34

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2.1 INTRODUCTION:

The literature review is a critical component of any scholarly research, serving as the
foundation upon which the study is built. In the context of the research on the
performance evaluation of selected mutual funds in India, an extensive literature
review has been conducted to survey existing academic studies, industry reports, and
relevant publications. This literature review aims to provide a comprehensive
overview of the current state of knowledge in the field, offering insights into various
aspects of mutual fund performance, risk assessment, and investment strategies. By
synthesizing and analysing existing literature, this review contributes to the
conceptual framework of the research, helping to identify gaps, trends, and areas
requiring further exploration. The literature review serves as a guide for
understanding the theoretical underpinnings and empirical evidence related to mutual
funds, informing the research methodology, analysis, and interpretation of findings in
the subsequent sections of the study. Hence, an earnest attempt has been taken to
review the available literature. In this study National as well as International research
papers are taken to identify the innovative practices followed by the mutual fund
industry.

2.2 INTERNATIONAL STUDIES:

1. Sharpe, W. (1966), conducted a study entitled ―Mutual Fund Performance‖ proposed

a composite metric that takes both risk and return into account. Using the metric he proposed,
he examined the performance of 34 open-ended mutual funds from 1944 to 1963. His study
shows that mutual funds' average performance was inferior than that of the market proxy. His
research highlights an attempt to apply current work in capital theory and stock-market price
behaviour to the measurement and prediction of mutual fund performance. Their study
revealed that the performance can be measured using a simple yet theoretically relevant
measure that considers both average return and risk.

2. Jensen, M (1968), in his paper "Performance of Mutual Funds from 1945 to 1965,"
developed a risk-adjusted measure of portfolio performance (now known as Jensen's Alpha)
that approximated how much a manager's predicting skill contributed to the fund's returns.
This study used the metric to quantify the predictive capacity of 115 mutual fund managers
from 1945 to 1964, i.e. their ability to achieve returns that are greater than what we would
anticipate given the amount of risk in each of the portfolios. The study found that not only

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was fund managers unable to anticipate prices accurately enough to excel, but that none of the
funds performed much better than predicted.

3. Fama, E. (1972), conducted a study entitled ―Components of Investment

Performance‖ in this study the returns on a portfolio were separated into two parts in this
study. The first was the return from security selection, and the second was the reward for
enduring the risk. This model compared a fund's performance in terms of returns with the
required return proportionate to the overall risk associated with it. The difference between
these two was considered as a measure of the fund's performance and is known as net
selectivity, which shows the fund manager's stock selection skill. This was due to the excess
return over and above the return necessary to reimburse for the overall risk incurred by the
fund manager.

4. Lehmann, Band Modest, D. (1985), conducted a study entitled ―Mutual Fund

Performance Evaluation-A Comparison of Benchmarks and Benchmark Comparisons‖ This
paper was to ascertain whether the absolute and relative rankings of managed funds were
sensitive to the benchmark chosen to measure normal performance. They employed the
standard CAPM benchmarks and a variety of APT benchmarks to investigate this question.
However, found the rankings of the funds were not very sensitive to the exact number of
common sources of systematic risk that were assumed to impinge on security returns.

5. Dahlquist, M.Engstrom, S. & Soderlind, P. (2000), conducted a study entitled

―Performance and Characteristics of Swedish Mutual Funds‖ This paper studies the relation
between fund performance and fund attributes in the Swedish market. Performance was
measured using alpha and betas in a linear regression and cross-sectional analysis were also
used. In results, good performance was to be found among small equity funds, low-fee funds,
funds whose trading activity was high, and in some cases, funds with good past performance.
Equity funds in the public savings program offering certain tax advantages, bond and money
market funds performed less well, and they document significantly negative alphas for these
fund categories. The measured performance results were very robust

6. Pastor, L.& Stambaugh, R. (2001), conducted a study entitled ―Mutual Fund

Performance and Seemingly Unrelated Assets‖ They investigate the performance of a large
sample of equity mutual funds and found that the additional information about a fund’s alpha
and Sharpe ratio provided by seemingly unrelated assets can be substantial. For most funds,
they find that including information in non-benchmark assets was more important than
specifying the degree to which the non-benchmark assets were priced by the benchmarks.

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They also find that, across different beliefs about pricing, most funds have underperformed
the CAPM and Fama-French benchmarks.

7. S. M. Aamir Shah and Syed Tahir Hijazi (2005), conducted a study entitled
―Performance Evaluation of Mutual Funds in Pakistan‖ This paper provides an overview of
the Pakistani mutual fund industry and investigates the mutual funds risk adjusted
performance using mutual fund performance evaluation models. Result shows that on overall
basis, funds industry outperforms the market proxy by 0.86 percent. They were investing in
the market very defensively as evident from their beta. Whereas results also show that some
of the funds under-performed, these funds were facing the diversification problem. Excellent
performance and stringent regulations would increase the popularity of mutual funds in
Pakistan.

8. Swinkels, L. and Rzezniczak, P. (2008), conducted a study entitled ―Performance

evaluation of Polish mutual fund managers‖ This study aims at evaluating the performance of
mutual fund managers in one of the fastest growing financial markets in emerging Europe.
They use well-known performance evaluation measures to investigate whether private
investors in Poland have benefited from investing in mutual funds. Their results indicate that
mutual funds in each of the three categories have positive, but insignificant selectivity skill,
indicating that a private investor would not have been worse off by investing in mutual funds.
They do not found any evidence of equity or bond market timing skill by Polish mutual funds.

9. Karoui, A. and Meier, I. (2008), in their paper entitled ―Performance and

Characteristics of Mutual Fund Starts‖ They provide evidence for short-term persistence
among top performing fund starts, however, a substantial fraction of funds drops from the top
to the bottom decile over two subsequent periods. They found that returns of fund starts
indeed exhibit higher total and unsystematic risk. Portfolios of new funds are typically also
less diversified in terms of number of stocks and industry concentration and were invested in
smaller and less liquid stocks.

10. A.B.M. Munibur Rahman and Fang Qiang, Suborna Barua (2012), conducted a study
entitled ―Mutual Fund Performance-An Analysis of Monthly Returns of an Emerging Market‖
It was found that, most of the mutual funds have performed better according to Jenson and
Treynor measures but not up to the benchmark of Sharpe ratio. However, very few mutual
funds were well diversified and has reduced its unique risk. The growth oriented funds had
not performed better in terms of total risk and the funds were not offering advantages of
diversification and professionalism to the investors. So, mutual funds cannot perform always
better with their expertise and cannot beat the market.

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11. Dawood, A. (2012), in his paper entitled ―Performance evaluation of Islamic mutual
funds relative to conventional funds: Empirical evidence from Saudi Arabia‖ In this article
standard CAPM regression and Treynor and Mazuy (1966) models were used to compare the
market timing and stock selection abilities of IMFs and conventional funds by using monthly
returns data on 159 mutual funds listed on the Saudi Arabian stock market from 2007 to 2011.
The empirical results provide evidence of better performance of IMFs relative to conventional
funds during the economic crisis.

12. Khan, K., Jamil, A. and Ahmar Uddin, A. (2016), conducted a study entitled
―Performance evaluation of mutual funds in Oman: An investors’ perspective‖ The basic
objective of the study was to provide to the investors a comparative study of the performances
of the various mutual funds on offer in Oman and give an insight about the possible good
choices to invest. The study concluded that mutual funds in Oman during the last five years
have been performing consistently and earning good returns for its investors.

13. Kuhle, J.and Lin, E. (2018), conducted a study entitled ―An Evaluation of Risk and
Return Performance Measure Alternatives: Evidence from Real Estate Mutual Funds‖ The
purpose of this study was to investigate the consistency of risk-adjusted performance between
the Sharpe index, the Treynor index, and the Sortino ratio. This research seeks to identify
which risk-adjusted return measure, based on ex-post data, may be a more accurate predictor
of overall performance. Results show that the Sharpe Ratio surpasses the Treynor index and
the Sortino ratio in assessing the risk-adjusted performance of real estate mutual funds during
a ten-year period from 2007 to 2016.

2.3 NATIONAL STUDIES:

14. Tripathy, N. (2004), conducted a study entitled ―An Empirical Analysis on

Performance Evaluation of Mutual Funds in India: A study on Equity Linked Savings
Schemes‖. The performance of 31 tax planning programmes in India from 1994–1995 to
2001–2002 is evaluated in the current study. In this article, six performance indicators were
used to analyse the investing performance of Indian mutual funds. The findings show that the
fund managers under investigation have not been successful in achieving returns above the
market or in effectively guaranteeing portfolio diversity.

15. Sireesha, B. (2005), conducted a study entitled ―Mutual Funds- Performance

Evaluation of Select Equity Schemes‖ In this paper an attempt was made to evaluate the
performance of six growth-oriented equity schemes of Mutual Funds on the basis of monthly
returns compared to the benchmark returns (Sensex and Nifty). For this purpose, risk adjusted

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performance measures such as Sharpe ratio, Treynor ratio and Jensen ratio were employed. It
was found that, HDFC was the best among this sample followed by Sundaram and Principal
respectively. Despite being a very well diversified scheme, Morgan has very high levels of
risk, which needs appropriate control measures. SBI needs to concentrate upon further
diversification of its investments in order to improve its average returns as well as in reducing
its risk levels (both systematic and unsystematic)

16. Y. V Reddy and S.B. Patkar (2005), conducted a study entitled ―Performance
Evaluation of Mutual Fund‖ The study aims to evaluate the performance of mutual fund
schemes through risk return analysis. The article was based on secondary data, and the return
has been estimated using weekly-end net asset value for each mutual fund scheme in the
sample from 1998 to 2001. The interest rates on bank deposits were considered as a risk-free
asset in the research. Sharpe, Jenson, and Treynor measures, among others, are examples of
risk return analyses that have been used to evaluate the success of mutual fund schemes.

17. Patel, J. & Patel, M. (2012), conducted a study entitled ―Performance of Mutual Fund
in India (Diversified Equity Growth)‖ The main objective of this study was to measure the
performance of diversified equity growth scheme with different performance measurement
tools like Sharpe’s measure, Treynor’s measure, Jensen’s alpha, Rank conflict. Analysis was
based on the monthly NAV of 43 companies for the period of 2003 to 2010. From this study
they found that all the companies gave same rank expect those shown to Rank conflict
analysis. Sharpe’s & Treynor’s Measures gave the same result but in case of Jensen’s Alpha
measures it’s gave different.

18. A. Vennila &R. Nandhagopal (2012), conducted a study entitled ―Study on

Performance Evaluation of Mutual Fund Schemes in India during Pre-recession, Recession
and Post-recession period‖ This article deals with the changes occurred in the industry in the
pre-recession, recession and post-recession period and its impact in the Indian Financial
Market. In the pre-recession period, this industry experienced significant growth thanks to the
overall growth in GDP, Positive Business Climate and Optimistic Investor sentiment. But in
the recession period, the industry witnessed the radical decline in the growth due to reversal
of the above said factors. In the post-recession period, the industry has been struggling to
capture the missed place in the market and in the verge of introducing innovative strategies to
overcome the issues being faced.

19. Roy, S. and Ghosh, S. (2012), conducted a study entitled ―A Comparative Study of
Mutual Fund Performance during Recession in India‖ This study has examined the
comparative performance of the open-ended gilt schemes of three types of companies (Public

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sector, Indian private sector & foreign private sector). This paper has examined the risk-
adjusted performance, selectivity performance, diversification performance and market timing
performance. It has been observed that the performance of the open-ended gilt schemes of
different types of companies was not satisfactory during the recession period. However, the
returns of all but one of the selected open-ended gilt schemes were seen to have positive
performances but were not statistically significant.

20. Prajapati, K. and Patel, M. (2012), conducted a study entitled ―Comparative Study on
Performance Evaluation of Mutual Fund Schemes of Indian Companies‖ The results of
performance measures suggest that most of the mutual fund had given positive return during
2007 to 2011. Funds with beta close to one, means the fund’s performance closely match the
benchmark index. Sharpe’s Index of HDFC Mutual fund was higher than the other, so it
shows good performance compared to other funds. Treynor’s Index result revealed that the
HDFC and Reliance mutual fund offers better return in comparison to ICICI Prudential, UTI,
and Birla Sun Life Mutual funds for the same level of risk exposure.

21. Bahl, S and Meenakshi Rani (2012), conducted a study entitled ―A Comparative
Analysis of Mutual Fund Schemes in India‖ The paper investigates the performance of 29
open-ended, growth-oriented equity schemes for the period from April 2005 to March 2011.
The historical performance of the selected schemes was evaluated on the basis of Sharpe,
Treynor, and Jensen’s measure whose results would 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 under-performed, these schemes were facing the diversification problem.

22. Mehta, S and Shah, C. (2012), in their study of ―Preference of Investors for Indian
Mutual Funds and its Performance Evaluation‖. In this research paper, researcher has an
objective to know preference of mutual funds investors and performance evaluation of the
preferred schemes by the investors. The survey is conducted among 100 educated investors
from Ahmedabad and Baroda, and the major findings highlight the key variables that affect
mutual fund buyers' purchasing decisions, the sources on which investors rely most frequently
when making investments, and the preferred method of investing in the mutual fund market.
The study will be of great use to academics as well as to AMCs, Brokers, Distributors, and
other potential investors.

23. Vanaja, V. and Karrupasamy, R. (2013), conducted a study entitled ―A Study on the
Performance of select Private Sector Balanced Category Mutual Fund Schemes in India‖ The

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study evaluates that only two out of the five private sector balanced category mutual funds
has earned a return above the average returns. Two firms have made negative returns. All the
private sector balanced category funds selected for the study has a positive Sharpe, Treynor
and Jensen ratio. There was positive correlation in case of 12 private sector funds between
market returns and fund returns. Negative correlation was found in case of 13 private sector
funds.

24. Prajapati, B. and Prajapati, B. M. (2013), conducted a study entitled ―Performance of

the Indian Mutual Fund Industry: Imperical Study of Diversified Equity Schemes‖ Study
results shows that mutual fund outperformed the market during up trend market. In their study
they had analyzed 43 different diversified equity schemes. They had selected top- 20 schemes
using return based rank and based on the popular measurement techniques. Performance of
the following schemes have been found consistence across the different measurement criteria.
Some funds show the superior ability of fund manager to outperform the market.

25. Roy, S. (2014), conducted a study entitled ―Performance Evaluation of Mutual Fund
in India: An Empirical Study‖ The study found that the schemes have provided satisfactory
returns to the investors. But, the managers have failed to reduce the magnitude of
diversifiable risk. Therefore, the schemes have excessive unsystematic risk. Moreover, the
managers cannot predict the market movement at right time; as a result, the managers are
unsuccessful to generate extra returns due to poor market timing performance. It was
observed that the schemes have provided positive extra returns to the investors and some of
the schemes have out-performed the market, though, the average performance of the schemes
was lower than the market index. The extra returns due to stock-selection performance of five
schemes out of thirty schemes were positive.

26. Jain, M. Singal, P. and Dwivedi, A. (2014), conducted a study entitled ―Performance
Evaluation of Mutual Funds: A study of Selected Researches‖ The primary goal of this
research is to examine the mutual fund investing policies and techniques employed by various
researchers in past years. In this research, 14 studies on mutual funds are reviewed for this
aim. Previous research has been undertaken between 1965 to 2012. The main purpose of the
study was to focus on many research undertaken on mutual funds in India and outside India.

27. Bhatt, P. (2014), in her study of ―A Study on Performance Evaluation of Selected

Equity Mutual Funds in India‖. This research aims to evaluate the performance of mutual
funds as well as the role of asset management companies in the public and private sectors.
The primary goal of this research was to examine the financial performance of chosen mutual
fund schemes using statistical characteristics such as (beta, standard deviation, coefficient of

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determination, Sharpe ratio). The study's findings will be useful to investors in making future
investment decisions.

28. Choudhary, V. and Chawla, P. (2014), conducted a study entitled ―Performance

Evaluation of Mutual Funds: A Study of Selected Diversified Equity Mutual Funds in India‖
The analysis was achieved by assessing various financial tests like Average Return, Sharpe
Ratio, Treynor Ratio, Standard Deviation, Beta and Coefficient of Determination (R2). The
data has been taken from various websites of mutual fund schemes and from amfiindia.com.
The analysis depicts that majority of funds selected for study have outperformed under Sharpe
Ratio as well as Treynor Ratio.

29. Arora, K. (2015), in her study entitled ―Risk-adjusted Performance Evaluation of

Indian Mutual Fund Schemes‖ The results of Sharpe ratios of mutual fund schemes revealed
that during the full study period, Sharpe ratios of 52 per cent of schemes were better than the
Sharpe ratios of their benchmark indices. The findings suggest that the overall performance of
mutual fund schemes during the study period was mixed.

30. Rohitraj, S. and Rao, D. (2015), conducted a study entitled ―Performance Evaluation
of Open Ended Large Cap Equity Mutual Fund and Mid & Small Cap Equity Mutual Fund
Growth Scheme with Special Reference to SBI Mutual Fund and HDFC Mutual Fund‖ The
study was primarily done to evaluated the performance of the selected Mutual Funds schemes
over a period ranging from 2009 to 2014. Thus, the fund was earning more than the expected
returns.

31. Goyal, M. (2015), conducted a study entitled ―Performance Evaluation of Top 10

Mutual Funds in India‖ To compare performance, many absolute and relative performance
measurements such as Sharpe measure, Treynor measure, and Jensen Alpha were used.
According to the analysis, all of the schemes generate a greater and superior average return
than the market. Franklin India Opportunities Fund is the top performance, with a greater
average return and lower risk, making it ideal for investors seeking bigger returns at a reduced
risk.

32. Sanningammanavara, K. Girish, K. and Manjunath, S. (2016), conducted a study

entitled ―Performance Evaluation of Selected Mutual Funds – An Empirical Case of Indian
Stock Market‖ The objective of this study was to determine which funds were the best in
terms of risk and return, so that investors may invest in those funds. The return and risk were
calculated using secondary data which was gathered from multiple reliable sources. The risk

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has been measured using standard deviation and beta. The result shows that small and mid-
size funds outperform large cap funds in terms of returns, but large cap funds have a larger
total risk.

33. N. Bhagyasree & B. Kishori (2016), conducted a study entitled ―A Study on

Performance Evaluation of Mutual Funds Schemes in India‖ In this study the historical
performance of the selected schemes was evaluated on the basis of Sharpe, Treynor, and
Jensen’s measure whose results was useful for investors for taking better investment
decisions. The study revealed that 14 out of 30 mutual fund schemes had outperformed the
benchmark return. The results also showed that some of the schemes had underperformed
because these schemes were facing the diversification problem.

34. Solanki, A. (2016), conducted a study entitled ―A Study of Performance Evaluation

of Mutual Fund and Reliance Mutual Fund‖ This paper aims to evaluate the performance of
Reliance open-ended equity schemes with growth option. To evaluate the performance of the
selected mutual fund schemes, monthly returns were compared with Benchmark BSE
National 100 and SENSEX returns. The study concluded that all schemes showed an average
return higher than in comparison to the market return i.e. BSE 100 and SENSEX except one
i.e. Reliance Focused Large Cap Fund.

35. P. Sathish and K. Sakthi Srinivasan (2016), conducted a study entitled ―Performance
Evaluation of Selected Open Ended Mutual Fund Schemes in India- An Empirical Study‖
This research paper was an attempt to evaluate the performance of selected schemes of
different mutual funds in India. The performance of selected funds was evaluated by using
different statistical tools. All the schemes have given positive return over the study period.
ICICI Prudential Mid cap fund growth has given the highest return.

36. Ayaluru, M. (2016), conducted a study entitled ―Performance Analysis of Mutual

Funds-Selected Reliance Mutual Fund Schemes‖ From the study it was observed that among
the selected funds Reliance Small cap fund is considered as a fund with moderate risk as well
as moderate returns, against which the Reliance Bank Fund is considered as high risk with
high returns.

37. Das, A. and Megaravalli, A. (2017), conducted a study entitled ―Evaluation of Mutual
Fund Schemes: An Emperical Evidence‖ Empirical results indicate that Sharpe ratio was
positive for all schemes which showed that funds were providing returns greater than risk free
rate. Results of Sharpe measure revealed that 15 out of 10 schemes showed negative beta and

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& Treynor measure revealed that 15 out of 5 showed positive beta which indicated superior
performance of the schemes.

38. M Ravichandran and A Jeyaraj (2017), conducted a study entitled ―A study on

performance evaluation mutual fund schemes in India‖ This study was aimed at evaluating
performance of mutual funds and also to inspecting the role of asset management companies
in reference to public and private sector. The main objective was to study financial
performance of 20 open ended, diversified equity schemes for the period of April 2013 to
March 2017 through the statistical parameters such as beta, standard deviation, coefficient of
determination, Sharpe ratio. The daily closing NAV of different schemes have been used to
calculate the returns from the fund schemes. S & P BSE Sensex has been used for market
portfolio. The findings of this study would helpful to investors for their investment decisions
in future.

39. M. Sheik Mohamed and M. Kaja Muhaideen (2017), conducted a study entitled ―A
Study on Performance Evaluation of Selected Open-ended Equity Mutual Fund Schemes in
India‖ In this paper the researcher tried to evaluate the performance of top five performed
open-ended equity schemes with growth option. The period of the study spans from 1st April
2014 to 31st March 2017.To evaluate the performance of the selected mutual fund schemes,
quarterly, half yearly and yearly wise were compared with Benchmark S&P, CNX Nifty, BSE
National 100 and SENSEX returns. These schemes were given good return for their investors.

40. Rani, G. and Hooda, V. (2017), conducted a study entitled ―Performance Evaluation
of Mutual Fund Schemes: A Study of Selected Topper Schemes‖. The aim of this paper was
to evaluate the performance of mutual fund schemes ranked one by CRISIL. To analyzed the
performance of selected funds’ schemes, mean returns and their standard deviation were
considered and then basic measures in this regard- Sharpe’s Ratio, Jensen’s Ratio and
Treynor’s Ratio were ascertained and interpreted accordingly. It was found that Tata equity
P/E fund was good performer among the selected schemes during April 2016 to March 2017

41. Mamta & Satish Chandra Ojha (2017), conducted a study entitled ―Performance
Evaluation of Mutual Funds-A Study of Selected Equity Diversified Mutual Funds in India‖
The main aim of this paper was to evaluate the performance of Indian equity diversified
mutual funds. A subsidiary aim was to analyze the relationship between risk and return of
these funds, based on total risk and systematic risk. The data has been taken from various

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websites of mutual fund schemes and from amfiindia.com. The analysis depicts that, majority
of funds selected for study have outperformed, under Sharpe Ratio as well as Treynor Ratio.

42. Dash, M. (2018), conducted a study entitled ―Performance of Select Mutual Funds in
India‖ The research investigates mutual fund growth and evaluates the operation of mutual
fund schemes throughout this period, focusing on six mutual fund growth schemes. In the
analysis, we discovered that the Sharpe ratio was positive for five of the six schemes chosen,
indicating that the funds were producing returns larger than the risk-free rate. Treynor ratio
revealed a positive for all examined schemes, indicating that the schemes outperformed. The
Jensen measure revealed that all of the chosen schemes had positive alpha, indicating greater
performance of the schemes.

43. Dash, M. & Lall, G. (2018), has made a study on ―Performance Evaluation of Equity
Based Mutual Funds in India‖ examined the performance of 15 equity based mutual fund
schemes. They accumulate monthly NAV for calculate returns of different schemes. Its
performance depends on the performance of underlying portfolio. The study evaluates
performance of selected mutual fund schemes using Sharpe and Treynor’s ratio and
sensitivity to the market fluctuation in terms of beta.

44. Sharma, R. (2018), has made a study on ―Performance Evaluation of Mutual Funds in
India." conducted a comprehensive study on the performance evaluation of selected mutual
funds in India. The author employed various financial metrics and ratios to assess the funds'
performance over a specified period. The findings indicated that a majority of the selected
mutual funds demonstrated consistent and above-average returns, outperforming benchmark
indices. The study emphasized the importance of considering both risk-adjusted returns and
fund management expertise when evaluating mutual fund performance.

45. V. Rathnamani and P. Ravichandran (2018), in their study entitled ―A Study on the
Performance of Selected Liquid Mutual Fund‖ In this paper an attempt was made to evaluate
the performance of liquid fund returns using arithmetic mean and compounded annual growth
rate, risk and return of the fund were analysed using S.D, beta, share and Treynor ratio, and
the fund's performance was compared to its benchmark return.

46. Ghuge, N. (2019), in his study entitled ―A Study of Performance Evaluation of

Selected Equity Mutual Fund Schemes in India Using Sharpe’s Ratio‖. In this paper an
attempt was made to evaluate the performance of selected equity mutual fund schemes in

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India by using the Sharpe Ratio. In this study, top five schemes from each large cap, mid cap,
and small cap category were chosen based on their assets under management. The Sharpe
Ratio was used to compare the performance of different schemes since it was an excellent tool
for evaluating the performance of mutual funds because it allows us to compute risk adjusted
returns.

47. Patel, S. (2019), in his study entitled ―Risk-Return Analysis of Indian Mutual Funds."
In a subsequent study, he delved into the risk-return profile of mutual funds in the Indian
market. The research highlighted the significance of assessing risk alongside returns, as it
contributes to a more comprehensive understanding of a fund's performance. Patel's findings
suggested that some mutual funds displayed higher risk-adjusted returns, indicating efficient
portfolio management strategies. The study recommended investors consider both historical
performance and risk metrics to make informed investment decisions.

48. Samanta, T. (2019), conducted a study entitled ―A Study on the Performance of

Mutual Fund Scheme in India‖ An attempt was made to investigate the performance of the
open ended, growth oriented, equity diversified schemes on the basis of return and risk
evaluation. The data was taken from various websites of mutual fund schemes and from
amfiindia.com. The analysis portrays that majority of funds selected for study has
outperformed under Sharpe Ratio as well as Treynor Ratio.

49. Maheswari, R. andDineshkumar, R (2019), conducted a study entitled ―A Study on

Performance Evaluation of Mutual Fund with Reference to Axis Mutual Fund‖. The analysis
was carried out by evaluating several financial tests such as the average return, Sharpe ratio,
Treynor ratio, standard deviation, beta, and coefficient of determination. The information was
gathered from numerous mutual fund schemes websites as well as from amfiindia.com.
According to the analysis, the majority of the funds chosen for the study was outperformed
using the Sharpe and Treynor ratios.

50. Nenwani, P. (2019), in her study of ―A Study on Performance Evaluation of Different

Types of Mutual Funds in India in 2018‖. The findings of this study provide insights into the
performance of various mutual funds during the recent period of financial slowdown, which
can help investors to make better, more informed investment decisions that provide capital
appreciation while limiting exposure to volatility in a highly volatile and risky environment.

51. Khan, A. (2020), conducted a study entitled ―Market Conditions and Mutual Fund
Performance: A Case Study of India‖. The study revealed that mutual funds with a flexible

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and adaptive investment strategy tended to navigate volatile market conditions more
effectively. Khan suggested that investors should analyse a fund's ability to adapt to changing
market scenarios and its historical performance during different market phases for a more
nuanced evaluation.

52. Sharma, K. (2020), in her study entitled ―Performance Analysis of Mutual Fund: A
Comparative Study of the Selected Debt Mutual Fund Scheme in India‖. The study was
employed NAV and total return of these selected funds, as well as several research tools
including as alpha, beta, Sharpe ratio, and Jenson's ratio were used. Investors were
recommended to study the statistical parameters to ensure the mutual fund's consistent
performance. This research provides some insight into mutual fund performance, which will
assist them in making logical investment decisions and allocating their resources to the
appropriate mutual fund schemes.

53. Patel, J (2020), in her study of ―A Study on Performance Evaluation of Selected

Mutual Funds in India‖. An attempt was conducted to study on chosen mutual funds in India,
with a sample size of seven mutual funds. Financial ratio analysis was used to evaluate fund
performance, considering NAV (Net Asset Value) and return over three years from 17th July
2017 to 2019. Using three years of data, calculate Sharpe ratio, Variance, BETA, and Jenson's
alpha. This study discovered that market sentiment had a greater impact on aggressive hybrid
open-end funds than on conservative funds.

54. Verma, S. (2020), conducted a study entitled ―Actively Managed vs. Index Funds: A
Comparative Study in the Indian Mutual Fund Industry‖. The study found that while actively
managed funds had the potential for higher returns, index funds consistently provided lower
expenses and often matched or outperformed actively managed counterparts. The research
recommended investors consider their risk tolerance and investment objectives when
choosing between active and passive investment strategies.

55. Joshi, P. (2021), conducted a study entitled ―Expense Ratios and Mutual Fund
Performance‖. The research suggested that funds with lower expense ratios tended to provide
better net returns to investors. Joshi emphasized the need for investors to consider not only
raw returns but also the costs associated with fund management. The study underscored the
importance of cost-effective investing for long-term wealth accumulation.

56. Kumar, M. (2022), in his study entitled ―Macroeconomic Factors and Mutual Fund
Performance: Evidence from India‖ The study identified that factors such as inflation, interest

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rates, and GDP growth significantly influenced the returns of mutual funds. Kumar's findings
underscored the importance of considering macroeconomic conditions when evaluating and
selecting mutual funds, as these factors can have a profound impact on fund performance.

57. Tripathi, V. and Bhandari, V. They conducted a study entitled ―Performance

Evaluation of Ethical and Conventional Funds – A Study of Taurus Mutual Fund in India‖
this paper seeks to evaluate and compare the performance of ethical mutual funds with
general funds and benchmark index (S&P BSE Shariah 500 Equity Index) in the Indian
market. The sample comprises of six ethical fund schemes and three general fund schemes of
Taurus mutual fund over the period 2009-2014 using weekly NAVs. The study used return,
risk, risk-adjusted measures (Sharpe ratio, Treynor ratio, Jensen’s alpha and information
ratio), Fama’s decomposition measure, paired samples t-test and growth regression equation
to accomplish the objectives. The findings suggested that some of the ethical funds generated
significantly higher return than other funds and benchmark index.

58. Anand, S. & Murugaiah, V conducted a study entitled ―Analysis of components of

Investment Performance - An Empirical Study of Mutual Funds in India‖ In this paper, an
attempt was made to examined the components and sources of investment performance in
order to attribute it to specific activities of Indian fund managers. For this purpose, Fama’s
methodology is adopted. The study covers the period between April 1999 and March 2003
and evaluated the performance of mutual funds based on 113 selected schemes having
exposure more than 90% of corpus to equity stocks of 25 fund houses. The study concluded
that the influence of market factor was more severe during negative performance of the funds
while the impact selectivity skills of fund managers was more than the other factors on the
fund performance in times of generating positive return by the funds.

59. Singh, N. (2023), conducted a study entitled ―Investor Sentiment and Mutual Fund
Performance: A Behavioral Perspective‖. The study revealed a strong correlation between
investor behaviour, sentiment, and short-term fluctuations in fund returns. Singh emphasized
the need for investors to be aware of the psychological aspects of the market and how
sentiment-driven decisions could impact mutual fund performance. The research
recommended a balanced approach, considering both quantitative metrics and market
sentiment.

60. Sharma, A. (2024), focused on the impact of regulatory changes on mutual fund
performance in India. The study highlighted that regulatory shifts, such as changes in expense
ratio limits or investment guidelines, could affect fund returns and risk profiles. Sharma's

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findings suggested that funds adapting swiftly to regulatory changes tended to fare better in
terms of long-term performance, emphasizing the need for investors to stay informed about
regulatory dynamics.

2.3 RESEARCH GAP:

While numerous studies have been conducted both at the national and global levels to
analyse the performance of mutual funds, there exists a notable gap in the literature
that this current study aims to address. Many past studies have predominantly focused
on a singular category of mutual funds or specific mutual fund companies, limiting
the breadth and comprehensiveness of their analyses. The unique contribution of this
research lies in its deliberate selection of 10 mutual fund schemes from each of the
equity, debt, and hybrid mutual fund categories in India. By encompassing a
diversified set of mutual fund types, this study seeks to provide a more holistic
understanding of the performance dynamics within different asset classes.

Furthermore, the majority of existing studies have often overlooked the

comprehensive analysis of the relationship and impact of benchmark indices on
mutual fund performance. In this study, the scholar has chosen the S&P BSE 200
index as a benchmark, offering a distinctive approach to evaluate how the broader
market movements, as represented by the index, influence the selected mutual funds'
performance. This nuanced examination aims to uncover insights into how different
mutual fund categories respond to and are affected by fluctuations in the S&P BSE
200 index, shedding light on the broader market dynamics and the implications for
investors.
Therefore, the gap in past studies lies in the limited scope of analysis, typically
focusing on a singular mutual fund category or overlooking the systematic evaluation
of benchmark impact. This current research, by systematically examining 30 mutual
fund schemes across diverse categories and incorporating the S&P BSE 200 index as
a benchmark, aims to contribute significantly to the existing body of literature. The
outcomes of this study are expected to provide a more nuanced and holistic
perspective on the performance evaluation of mutual funds, particularly in the context
of the Indian financial market.

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