Suggested citation pandow, bilal and butt, khurshid, risk and return analysis of mutual fund industry in india march 11, 2017. Analyze the funds with this sheet and look for a consistent riskreturn score and consistent downside protection and invest in one of them. This study explores the equity mutual funds performance in pakistan with the risk and return analysis. Types of stock funds there are thousands of funds investing in every corner of the stock market all over the world. The present study looks into the risk and return analysis of the select mutual funds in india.
This research study is focused on secondary source of data. This is to certify that the report on project work titled risk return analysis and comparative study of mutual funds for hdfc asset management company ltd. Yearly return of mutual funds, dividends, market portfolio, pakistan investment bonds, and net asset value. Mean monthly logarithmic return and risk of the sample mutual fund schemes during the period were 0.
Risk and return analysis on performance of the islamic mutual funds. In an effort to check out the performance of mutual funds in india, this study presents a complete analysis of growth of the various sector mutual funds during the period from 1999 to 2009 and further compares privatesector and publicsector funds in terms of risk and return. This is to certify that the report on project work titled risk return analysis and comparative study of mutual funds for. The study covered the period from april 1996 to march 2005 nine years. Sector fund is a mutual fund that invests in a specific. There are five main indicators of investment risk that apply to the analysis of stocks, bonds, and mutual fund portfolios. An introduction to risk and return concepts and evidence by franco modigliani and gerald a. The sharpe ratio is a measurement used to calculate how many units of return any investment.
To study and make a comparative analysis of the mutual fund schemes offered by reliance mutual fund and identify the best. This approach implicitly places no value on other potentially important attributes of the mutual fund investment decision. A critical analysis of selected mutual funds in india. The level of risk in a mutual fund mutual fund an investment that pools money from many people and invests it in a mix of investments such as stocks and bonds. Mutual funds schemes identifying the performance of mutual funds were calculating with the help of these models.
Sharpe model treynor model jenson model data analysis. Performance evaluation of indian mutual funds by narayan rao. The formula for this measure is treynor 2 2 1 2 2 2 1 1 m i f i m i ei i i m. They are alpha, beta, rsquared, standard deviation and the sharpe ratio. Performance evaluation of indian mutual funds by narayan. Various mutual fund risk manager and investors construct their portfolio or identify fund which minimizes volatility because there is a positive relationship between risk and return. Whether you invest in mutual funds or stocks depends on three factors.
The total risk is that how much the risk of the return on a fund is deviating the expected return based on performance of the funds. Four mutual funds achieved lower return than the general. You can lose money investing in mutual funds or etfs. Risk and return analysis of mutual fund industry in india by bilal. The purpose of this study is to find the performance of the pakistani mutual fund industry. All selected mutual fund companies have positive return during 2007 to 2011. Risk return analysis and comparative study of mutual funds by. To understanding the risk and return relationships for each mutual fund scheme under consideration. Oct, 2003 then after excluding the funds whose returns are less than risk free returns, 58 schemes were used for further analysis.
In general, funds with the potential for higher returns also have higher volatility and greater risk of losing money. That reduces risk because, if one company in the fund has a poor manager, a losing strategy, or even just bad luck, its loss is balanced by other businesses that perform well. This measure was developed by jack treynor in 1965 is based on systematic risk and known as reward to volatility ratio. Management style and performance measurement, journal of portfolio management, winter, 719.
Gautami abstract the indian mutual funds industry is witnessing a hasty growth as a result of infrastructural development, increase in personal financial assets, and rise in foreign participation. Risk and return analysis of mutual fund industry in india. Risk management in mutual fund linkedin slideshare. The name is mostly historical, as the first hedge funds tried to hedge against the downside risk of a bear market by shorting the market mutual funds generally cant enter into short positions as. This implied there is still some degree of unsystematic risk that one cannot get rid of through diversification. Where, rp is return of mutual fund portfolio, rf is risk free rate of return, p is standard deviation of the mutual fund portfolio. The difference between the required rate of return on a mutual fundgiven its riskand the riskfree rate is the risk premium. Performance analysis of mutual funds a study on selected mid cap and small cap funds. Arti sharma research scholar, department of commerce, s. A professional manager chooses investments that match the funds goals for risk and return. The analysis is based on the riskreturn relationship of the mutual fund. Page 0 a project report on study of risk management in mutual funds in the partial fulfillment of the requirement of master of management studies batch 20162018 submitted by deepak rajmani pandey roll no.
Mutual funds, irrespective of their categories, cannot generate common returns on investments or have an equal degree of risk. We compared their performance on total returns, a measure of performance net of fees, and downside deviation, a measure of risk. The study revealed that franklin templeton and uti were the best performers and birla sun life, hdfc and lic mutual funds showed poor performance. By pooling a lot of stocks in a stock fund or bonds in a bond fund, mutual funds reduce the risk of investing. No mutual fund can guarantee its returns, and no mutual fund is risk free. With the growing risk appetite, rising income, and increasing consciousness, mutual funds in india are becoming a preferred investment option. To be specific following are the main objective of the present research study. No knowledge of risk and return analysis is required to.
The core competence of the company is to meet objectives and the needs of the investors and to provide optimum return for their risk. A comparative analysis of performance, investment styles,and. The riskreturn relationship is perhaps one of the best to ways analyze the performance of a mutual fund. Pdf on jan 1, 2017, bilal ahmad pandow and others published risk and return analysis of mutual fund industry in india find, read and. A study on performance of risk and return on selected. A comparative analysis of performance, investment styles. An individual level analysis of the mutual fund investment. Growthandincome funds try to reduce risk by combining growth with a steadier source of return through dividends. We compared their performance on total returns, a measure of performance netoffees, and downside deviation, a measure of risk. Pdf the mutual funds is one of the important classes of financial intermediaries enabling tens of thousands small and large savers across india to. Mutual funds provide an investment options for retail investors or individual investors those who are not aware about stock market still they want.
The risk of investing in mutual funds is determined by the underlying risks of the stocks, bonds, and other investments held by the fund. A percentage score is assigned to the fund for each investment duration based on 12 different riskreturn metrics a total of risk and return 16 benchmarks this analyzer can be used by all retail investors. A study on performance evaluation of mutual funds schemes in. No mutual fund can guarantee its returns, and no mutual fund is riskfree. In doing so, the sample mutual funds were ranked on the basis of their return, total risk, coefficient of variation, systematic risk, and the techniques of treynor, and sharpe. Its possible to measure the risks and returns involved in any mutual fund. Pandow, bilal and butt, khurshid, risk and return analysis of mutual fund industry. Once we calculate beta, we can easily calculate the expected rate of return from a mutual fund. Sector funds are industry specific funds which invest money in a particular sector of economy such as banking, healthcare, real estate, technology, transportation, etc. The mutual funds is one of the important classes of financial intermediaries enabling tens of.
First, you must decide how much risk you can tolerate versus how much return you want or need. Mutual funds and etfs are not guaranteed or insured by the fdic or any other government agencyeven if you buy through a bank and the fund carries the banks name. Mutual funds offer several advantages over investing in individual stocks. Anjali bhute pillai institute of management studies and. Most research on mutual funds has employed two explanatory variables, namely, risk and return. All selected mutual fund companies have positive return during 2007 to. This study explores the equity mutual funds performance in pakistan with. Di erent mutual funds o er varying potential for return and risk. There are many sources of uncertainty that determine the appropriate risk premium, including market risk, business risk, liquidity risk, financial risk leverage, duration and credit risk for bonds and political. Oct 01, 2003 the present article aims to evaluate the performance of sixteen equity mutual funds operating in the greek financial market over the period 111995.
Higher risks are usually involved in equity funds compared to debt or bond funds. The analysis finds that, the private and public sector mutual funds both perform well when. A study on performance of risk and return on selected mutual. A study on performance evaluation of mutual funds schemes. Risk and return analysis of mutual fund industry in india by. Pogue1 today, most students of financial management would agree that the treatment of risk is the main element in financial decision making. Performance analysis of mutual fundsa study on selected mid.
This study is an attempt made to copeup with the problems faced by the investors to earn. Interactive data for mutual fund riskreturn summary. Evidence from malaysia conference paper pdf available april 2011 with 1,340 reads how we measure reads. For equity mutual funds, you can determine sip and lump sum returns for investment duration up to 10 years. We are adopting rule amendments requiring mutual funds to provide riskreturn summary information in a form that is intended to improve its usefulness to investors. If you want a higher return, then you must accept a higher risk. The analysis finds that, the private sector mutual funds, have outperformed the public sector ones. Understanding your nancial goals and risk tolerance is the rst step.
All mutual funds have a stated investment mandate that specifies whether the fund will invest in large. The industry broadly caters to all types of investors depending on their risk return preferences. In this paper the performance evaluation of indian mutual funds in a bear market is carried out through relative performance index, riskreturn analysis, treynors ratio, sharps ratio, sharps measure, jensens measure, and famas measure. A mutual fund is an sec registered openend investment company that pools money from many investors and invests. In this context it becomes pertinent to study the pattern and behavior of the mutual fund schemes, to which the common man is still unaware of it. Abstractmutual funds are one of the best intermediaries in capital markets to mobilize funds from general public. The performance evaluation of mutual fund is a vital matter of concern to the fund managers, investors, and researchers alike. Anjali bhute pillai institute of management studies and research, dr. Review of literature sathya swaroop debashish 2009 measured the performance of the equity based mutual funds in india. Mutual funds, risk, return, investors suggested citation. Mutual funds risk and mutual funds return a detailed. In this paper an attempt has been made to study the performance of selected mutual funds schemes based on risk return relationship models, and return on mutual funds are also compared with return. The study focuses on the risk and return analysis of performance of selected mutual fund schemes in india.
In keeping with this strictly economic frame, several scholars have investigated whether or not mutual funds outperform the market. It also depends on how much time you have to research your investments. A research on risk return analysis of selected growth option. A mutual fund is the ideal investment vehicle for todays complex and modern financial scenario. The analysis of mutual fund performance repub, erasmus. A mutual fund is like a bridge or a financial intermediary that allows a group of investors to pool in their money together with a predetermined investment objective and then this gathered money is invested by the fund manager into specific securities stocks or bonds. Pdf risk and return analysis of mutual fund industry in.
Pdf risk and return analysis on performance of the. We found that sustainable funds provided returns in line with comparable traditional funds while reducing downside risk. One protection against risk is time, and thats what young. Higher return funds may loose attractiveness due to higher risk while the lower return funds may be attractive to investors due to the lower risk. The mutual funds is one of the important classes of financial intermediaries enabling tens of thousands small and large savers across india to participate in and get the benefits of the capital market. Mutual funds risk and return, check mutual funds the risk and returns. Sahu 1988, the relationship between mutual fund size and riskadjusted performance.
Dietze, oliver and macro 2009 conducted a research to evaluate the risk adjusted performance of european investment grade corporate bond mutual funds. Introduction the investors choose mutual funds based on different characteristics. The study analyzed the performance of 80 mutual funds and based on their analysis, it was found that none of the mutual funds were fully diversified. A collective data for period of 15 years has been considered to calculate beta. Mar 26, 2020 there are five main indicators of investment risk that apply to the analysis of stocks, bonds, and mutual fund portfolios. And it indicates that the net asset value nav of the mutual fund more volatile than risk than a fund with lower standard deviation. The performance of these funds can be considered to be very good relative to the market portfolio. It is important to note that investments in securities e. The present article aims to evaluate the performance of sixteen equity mutual funds operating in the greek financial market over the period 111995.
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