A COMPARATIVE STUDY OF RISK AND RETURN ANALYSIS FOR SELECTED MUTUAL FUND SCHEMES

Abstract

Mutual Fund Industry has grown up by leaps and bounds, particularly during the last two decades of the 20^th century. Moreover the entry of private mutual funds (since 1993) has injected a sense of competition and the industry has been witnessing a structural transformation from a public sector monopoly to monopolistic industry. A proper evaluation measure will remove confusion and help small investors to decide about level of investment in various mutual fund schemes, so as to maximize the returns. Further, the growing competition in the market forces the fund manager to work hard to satisfy investor and the management. Therefore, regular performance evaluation of the mutual funds is essential for the investors and the fund manager also on the basis of the returns compared with the risk free security and stock market indices. The present work is also one in the series.

A mutual funds  is an investment company or trust  that pool the resources form thousands of its units holders, who share common c\goal, and then diversifies its  investment  into different types  of securities  in order to realize potential  returns  with reasonable safety . In the  era of globalization, first, rapid prices fluctuations are occurring  fir assets  like equity shares, bonds, real estate, derivatives, etc. Second, an individual also finds it difficult  to track his ownership of assets, investments , brokerage dues and bank transactions, etc. In this context , mutual funds  are the solutions.

Mutual Funds help the small and medium size investors to participate in the  today’s complex and modern financial scenario . Investors  can participate in  Mutual funds by buying the units of a specific Scheme.  Further Capital appreciation realized by the scheme are shared by its unit  holders proportion to the number of units owned by them as return on the investment.

Investment in share markets are influenced by the analysis & reasoning which help in predicting the market to some extent. Over the past years a number of technical  & theories for analysis have evolved, these combined with modern technology  guides the investor. The big players in the market, like Foreign Institutional  Investors, Mutual Funds, etc. have the expertise for various analytical tools & make use of them. The small investors are not in a position to benefit from the market the way Mutual Funds can do. Generally a small investor’s investments are based on market sentiments, inside information, through grapevine, tips & intuition. The small investors depend on brokers and brokerage house for his investments. They can invest through the Mutual Funds who are more experienced and expert in this field than a small investor himself. In recent years a large number of players have entered into his market. The project has been carried out to have an overview of Mutual Fund Industry and to understand investor’s perception about Mutual Funds in the context of their trading preference, explore investor’s risk perception & find out their preference over Top Mutual