Evaluation of Mutual Fund Schemes in India - Does Prolonged Existence Rewards Performance

Abstract

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Mutual fund is an intermediary that mobilizes the money of small investors by sparing them from the responsibility of individually selecting securities from the market and provides them with the benefit of diversification, professional management, liquidity, tax deduction, etc. However, it is suggestive that the investors must examine the past performance of the mutual fund schemes before investment. In the present study, the performance of open-ended short-term debt mutual fund schemes has been evaluated using risk-adjusted measures such as, Sharpe ratio, Treynor ratio, Jensen alpha, Appraisal ratio, MM measure and Information ratio for the period April 2015 to March 2020. It was found that Baroda Short Term Bond Fund and Indiabulls Short Term Fund were the pre-eminent performers while JM Financial Short Term Fund and Tata Short Term Bond Fund were the nastiest performing schemes during the study period. Further categorization of these schemes according to their years of inception (experienced) indicated no significant difference between their performances. However, investment in experienced or non-experienced mutual fund schemes seems promising.

Keywords: Mutual Funds, Short Term Debt Schemes, Average Return, Standard Deviation, Risk-Adjusted Measures

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