Evaluation of Mutual Fund Schemes: An Empirical Evidence

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Why is it important?

Mutual fund buyers are concerned about the selection of the best fund in terms of performance among the set of alternative funds. We propose a simple approach to measure the mutual fund performance using Sharpe and Treynor measures. The present study investigates the performance of 15 open-ended, growth-oriented equity schemes for the period from April 2010 to March 2015 (five years) of transition economy. Monthly NAV of different schemes have been used to calculate the returns from the fund schemes. The historical performance of the selected schemes were evaluated on the basis of Sharpe and Treynor measure whose results will be useful for investors for taking better investment decisions. Empirical results indicate that Sharpe ratio was positive for all schemes which showed that funds were providing returns greater than risk free rate. Results of Sharpe measure revealed that 15 out of 10 schemes showed negative beta and & Treynor measure revealed that 15 out of 5 showed positive beta which indicated superior performance of the schemes.