Content area
Full Text
Abstract
A mutual fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realized is shared by its unit holders in proportion to the number of units owned by them. The wide variety of schemes floated by these mutual fund companies gave a number of investment choices for the investors. Among these funds, equity diversified fund is considered as a substitute for direct stock market investment. In this research paper an attempt has been made to analyze the performance of the growth oriented Large Cap Fund Schemes on the basis of return and risk evaluation. The analysis was achieved through various financial tests like Average Return, Sharpe Ratio, TreynorRatio, Standard Deviation, Beta and Coefficient of Determination (R^sup 2^).The analysis depicts that majority of funds selected for study have outperformed under Sharpe Ratio as well as Treynor Ratio.
Key Words: Mutual Funds, Average Return, Standard Deviation, Coefficient of Determination
(ProQuest: ... denotes formulae omitted.)
Introduction
Investment is the sacrifice of certain present value for some uncertain future reward. In other words an investment can be defined as commitment of funds to one or more assets that will be held over some future time period. Broadly, an investment decision is a tradeoff between risk and return. A mutual fund is a special type of institution that acts as an investment instrument. Apart from the many advantages that investing in mutual funds provide like diversification, professional management, the ease of investment process has proved to be a major enabling factor. However, with the introduction of innovative products, the world of mutual funds nowadays has a lot to offer to its investors. A mutual fund is a pure intermediary that performs a basic function of buying and selling securities on behalf of its unit holders. Mutual fund is a body corporate which pools up the resources from different types of investors and invests those funds on behalf of the investors in diversified securities.In other words, a mutual fund allows an investor to take a position indirectly in a basket of assets.