REVIEW OF LITERATURE`
Dr. Rao, Narayan (2005), evaluated the performance of Indian Mutual
Fund Schemes in a bear market using relative performance index, risk-
return analysis, Treynor’s ratio, Sharpe’s ratio, Jensen’s measure, Fama’s
measure. The study finds that Medium Term Debt Funds were the best
performing funds during the bear period of September 98-April 2002 and 58
of 269 open ended mutual funds provided better returns than the overall
market returns.
Panwar,Sharad and Dr. Madhumathi (2006), differences in
characteristics of public-sector sponsored & private-sector sponsored
mutual funds find the extent of diversification in the portfolio of securities
of public-sector sponsored and private-sector sponsored mutual funds and
compare the performance of public-sector sponsored and private-sector
sponsored mutual funds using traditional investment measures.
DATA ANALYSIS
Mutual fund performance can be analyzed through
performance measurement ratios which are use in portfolio
analysis. We here are using Treynor, Sharpe, and Jensen ratio to
evaluate mutual funds and rank accordingly. Composite
portfolio performance measures have the flexibility of
combining risk and return performance into a single value. The
most commonly used composite measures are: Treynor, Sharpe
and Jensen measures. While Treynor measures only the
systematic risk summarized by beta, Sharpe concentrates on
total risk of the mutual fund.
COMPARISION OF TREYNOR, SHARPE & JENSEN’S
INDEX
RANK TREYNOR RANK SHARPE RANK JENSEN
1 ICICI 1 ICICI 1 ICICI
prudential prudential prudential
technology export & other technology
Reg services Reg Reg
2 Birla sun life 2 Birla sun 2 SBI IT
new lifenew
millennium millennium
3 SBI IT 3 ICICI 3 Franklin
prudential InfoTech
technology
Reg
4 ICICI 4 SBI IT 4 Birla sun life
prudential new
export & other millennium
services Reg
5 Franklin 5 Franklin 5 ICICI
InfoTech InfoTech prudential
export & other
services Reg
6 SBI Pharma 6 SBI 6 UTI
Pharma transportati
on &
logistics
7 Reliance 7 Reliance 7 SBI Pharma
Pharma Pharma
8 SBI FMCG 8 UTI 8 Reliance
transportatio Pharma
n & logistics
9 UTI 9 Franklin 9 Franklin
transportatio India smaller India smaller
n & logistics companies companies
10 Franklin 10 SBI FMCG 10 SBI FMCG
India smaller
companies
RESULTS AND FINDINGS
The study done on the performance evaluation of Indian mutual
funds was fruitful as all the objectives of the study were successfully
achieved. The following are the findings from this study.
The schemes selected for the study gave returns in coordination with
the markets. When there was boom in the stock market the funds
gave positive returns a little more than what the market had given.
During the recessionary phase the markets declined steadily and so
did the fund returns. Overall the fund returns and the market returns,
for the period of 1 year taken into consideration for this study.
Mostly all the mutual fund schemes are able to beat the market. That
means the schemes are well diversified.
From the entire 10 schemes best scheme is ICICI prudential
technology Reg fund growth because in all the two models it stands
on 1st rank and also it provides good return.
CONCLUSION
Mutual funds are one of the most highly growing products in
financial services market. Mutual funds are suitable for all types of
investors from risk adverse to risk bearer. Mutual funds have many
options of return, risk free return,constant return, market associated
returned. Mutual funds are suitable to all age of investors,
businessmen, salary person, etc.
Performance evaluation measurement ratios i.e. Treynor’s, Sharpe’s
and Jensen’s are used by fund managers to take decision of
investment and to diversify portfolio.
Mutual Fund is subject to market risk, analyzing particular fund
before investing.
For high return invest in diversified funds, for tax saving invest in
ELSS equity funds, for moderate risk and return invest in balance
funds, for assure return invest in debt and liquid funds.
As per our opinion, investor should invest around 30% in mutual
fund.
