A Study of the Return Generated and Managerial Efficiency of Select Mutual Fund Schemes in India.

Abstract

Indian When it comes to resource allocation in the developing market economy, mutual funds are quite important. When it comes to investing and raising capital, mutual funds serve as a financial middleman. A mutual fund's core component is its diversified investment portfolio, which disperses an investor's capital among several available or distinct investment kinds, so reducing risk. This study compares the performance of a few chosen mutual fund schemes to the Sensex Return from December 2008 to December 2012. For each of these mutual funds over this time, I have also examined the managerial effectiveness in stock selection using Alpha, Beta, and RSQ and their variability. Mutual funds are typically thought to be less volatile than the. I have also analysed the managerial efficiency in stock selection through Alpha, Beta and RSQ and their variability for each of these mutual funds in this period. It is generally believed that mutual funds are less volatile as the managers use their expertise in selecting the appropriate stocks for the mutual fund portfolio. The data is analyzed using Pearson's Product Moment Correlation Method, the coefficient of variation of the return generated by the Sensex and the Mutual Fund Schemes to determine a more stable series and ANOVA for the variation in Alpha, Beta and RSQ of the funds. It was found that in the given study period the variability in the return of the Mutual Fund Schemes are between moderate to high and thus these Mutual Fund Schemes may not be as stable as they seem to be and the fund managers were not so efficient in selecting stocks for all the funds. The investors should weigh their options carefully before deciding to invest in a Mutual Fund.