Abstract
Investing in mutual funds presents a straightforward entry point into the stock market, particularly for novice investors. Regardless of one’s familiarity with stock markets or age, mutual funds offer accessible investment opportunities. However, selecting the most suitable mutual fund scheme can be challenging, given investors’ varying risk appetites and financial goals. This study aims to assist such investors grappling with scheme selection dilemmas by analysing mutual fund schemes of many types and determining which ones offer superior returns at lower risks. The research evaluates the risk and return profiles of various mutual fund schemes taken up for the study. Utilising various ratio like Jensen’s, Sharpe, and Treynor, present discussion compares the returns by considering the systematic and unsystematic risk of selected schemes within each category. The analysis spans 5 years, from April 01, 2017, to March 31, 2022, drawing data from secondary sources including Moneycontrol, journals, books, and official websites of relevant financial bodies. BNP Paribas Large Cap Fund (G) emerges as a top performer in the sphere of large cap funds according to Sharpe and Jensen’s measures, while Edelweiss Large Cap Fund-A(G) excels by Treynor ratio. Among mid cap schemes, Edelweiss Mid Cap Fund (G) consistently outperforms its peers across all evaluated ratios. In the small cap category, Axis Small Cap Fund-Regular (G) stands out for delivering the highest returns on the basis of Jensen’s, Sharpe and Treynor ratios. Ultimately, this study serves to guide investors 2024in navigating the complexities of mutual fund selection, offering insights into which funds align best with their risk-return preferences and investment objectives. Findings reveal distinct return patterns across fund categories, with specific funds outperforming peers based on various return metrics. The study concludes that while BNP Paribas Large Cap mutual Fund (G) excels in large cap schemes, Edelweiss Mid Cap mutual Fund (G) stands out among mid cap funds, and Axis Small Cap mutual Fund-Regular (G) leads in the small cap mutual funds category. Implications suggest that investors can make informed decisions based on risk-return preferences, with large cap funds offering stability, mid cap funds providing moderate returns, and small cap funds presenting opportunities for better growth with higher risk acceptance capacity.
Keywords: Mutual Funds, Risk, Return, Return Evaluation, Financial Analysis, Financial Securities
View PDF