An Empirical Study on the Performance of Select Multicap Equity Mutual Funds in India

Abstract

Mutual funds are emerging as a popular choice among investors to park their surplus funds in India as exemplified by increasing assets under management (AUM). The study discusses several industry trends such as increase in mutual fund accounts and schemes, changing consumer preferences towards equity mutual funds and the increasing role of retail investors in the overall mutual fund market. While barriers continue to act as deterrents, the overall industry is poised to reach INR20,00,000 crore in terms of AUM by FY18. The study aims to evaluate the annual as well as periodical performance of 5 multicap mutual fund schemes of top 5 asset management companies for the period of five years from 1st April 2012 to 31st March 2017. Taking SandP BSE 500 as the benchmark index, the study computes several absolute and relative performance measures using Sharp and Treynor Ratios along with Jensen Alpha. The study finds that all schemes except HDFC Premier Multicap fund generated higher risk adjusted returns than the benchmark index. Birla Sunlife Equity fund emerged as the best performer with higher average returns and lower risk.