Evaluating Mutual Fund Performance in India: A Comparative Study of Equity and Debt Funds

Authors

Dr Ram Dhan Saini

Abstract

This paper presents a comprehensive evaluation of mutual fund performance in India through a comparative study of equity and debt funds. It investigates key performance metrics including average annual returns, risk-adjusted returns, expense ratios, and Net Asset Value (NAV) trends. The study highlights that equity funds generally offer higher returns but with increased volatility and risk, reflecting an average annual return of 14% and a standard deviation of 18%. Conversely, debt funds provide more stable returns with an average annual return of 7% and a lower standard deviation of 6%, offering better risk-adjusted returns as evidenced by a higher Sharpe Ratio of 1.2 compared to 0.7 for equity funds. The impact of market conditions, such as economic growth and interest rate fluctuations, significantly influences fund performance, with equity funds benefiting from strong economic periods but suffering during downturns, while debt funds remain resilient in volatile environments. Additionally, regulatory changes have affected fund operations and investor behaviour, enhanced transparency and impacting performance. This analysis underscores the importance of aligning investment choices with individual risk tolerance and financial goals, providing valuable insights for investors and financial advisors in the Indian mutual fund market.

Keywords

Mutual funds, Equity funds, Debt funds, Performance metrics, Risk-adjusted returns, Sharpe Ratio, Market conditions, Regulatory impact, Investment analysis, India

Evaluating Mutual Fund Performance in India: A Comparative Study of Equity and Debt Funds. Dr Ram Dhan Saini. 2016. IJIRCT, Volume 2, Issue 6. Pages 1-12. https://www.ijirct.org/viewPaper.php?paperId=2409014