This document provides an introduction and summary of a PhD thesis on evaluating the performance of selected mutual funds in India. It discusses the growth of the mutual fund industry in India, provides a brief literature review on previous studies of mutual fund performance, and outlines the need and objectives of the present study. The study aims to analyze the risk-adjusted performance of different types of mutual funds schemes over the study period, compare their performance to market returns, and examine factors like investors' motives, satisfaction levels, and the impact of regulatory norms on mutual fund performance in India.
This document provides an introduction and summary of a PhD thesis on evaluating the performance of selected mutual funds in India. It discusses the growth of the mutual fund industry in India, provides a brief literature review on previous studies of mutual fund performance, and outlines the need and objectives of the present study. The study aims to analyze the risk-adjusted performance of different types of mutual funds schemes over the study period, compare their performance to market returns, and examine factors like investors' motives, satisfaction levels, and the impact of regulatory norms on mutual fund performance in India.
This document provides an introduction and summary of a PhD thesis on evaluating the performance of selected mutual funds in India. It discusses the growth of the mutual fund industry in India, provides a brief literature review on previous studies of mutual fund performance, and outlines the need and objectives of the present study. The study aims to analyze the risk-adjusted performance of different types of mutual funds schemes over the study period, compare their performance to market returns, and examine factors like investors' motives, satisfaction levels, and the impact of regulatory norms on mutual fund performance in India.
This document provides an introduction and summary of a PhD thesis on evaluating the performance of selected mutual funds in India. It discusses the growth of the mutual fund industry in India, provides a brief literature review on previous studies of mutual fund performance, and outlines the need and objectives of the present study. The study aims to analyze the risk-adjusted performance of different types of mutual funds schemes over the study period, compare their performance to market returns, and examine factors like investors' motives, satisfaction levels, and the impact of regulatory norms on mutual fund performance in India.
A SUMMARY SUBMITTED TO THE MAHARISHI MARKANDESHWAR UNIVERSITY FOR THE AWARD OF THE DEGREE OF DOCTOR OF PHILOSOPHY (Ph.D.) IN MANAGEMENT (2014)
Under the Supervision of: Submitted By: Dr. S.L. Gupta Meenakshi Garg Sr. Professor & Dean Regn. No. 11-Ph.D.-130 MMIM (MMU)
M.M. INSTITUTE OF MANAGEMENT MAHARISHI MARKANDESHWAR UNIVERSITY, MULLANA - AMBALA - 133207 (HARYANA) INDIA
1 SUMMARY Introduction Mutual Iunds industry, today, is one oI the most preIerred investment options all over the world. It plays a crucial role in the economic development oI a country. Mutual Iunds` active involvement can be seen by their dominant presence in the money market as well as capital market. They are also Iound very active in the stock market by way oI ensuring stability as a supplier oI large Iunds through steady absorption oI Iloating stocks. Recently they entered the arena oI the service sector in an admirable manner. A mutual Iund is an entity in the Iorm oI a trust which pools the money oI large investors and invests the same in the diIIerent investment avenues. Such investment may be in the Iorm oI equity shares, debt securities, money market instruments, government securities, Iixed deposits, precious metals, etc. These investment securities are proIessionally managed on behalI oI the investors, also known as the unit-holders, who hold a pro-rata share oI the portIolio. Emergence oI mutual Iunds in the Indian scenario is a product oI constraints on the banking sector to tap the Iruits oI the capital market and the reluctance oI the investors to direct plunge in complex and erratic Iinancial market operations. Since, household sector`s share is much larger in the country`s savings; it is utmost essential Ior the government and mutual Iund managers to guide their deployment oI savings in the right direction. Thus, with a plethora oI mutual Iunds schemes available Ior option and their impressive growth in India, there was a need Ior the present study to bring to light the perIormance oI mutual Iunds, Further, it could guide the retail and small investors to make a appropriate decisions while selecting the investment avenues Ior their hard earned savings through mutual Iund vehicle. Growth of Mutual funds in India In India, the mutual Iund industry is started with the setting up oI Unit Trust oI India (UTI) in 1963 by the Central Government. Unit-64 (US-64) launched by the 2 UTI in 1964 became the Iirst mutual Iund scheme in the country. It monopolized the market till 1987, aIter that due to liberalization, privatization and globalization,policy oI the Central Government, a considerable growth was seen by entering oI many private and Ioreign players in this industry. Currently, around 44 AMCs with more than 1200 schemes are working in mobilizing the Iunds oI small savers Ior investment purposes. To cater a wide variety oI investors` needs, the mutual Iunds have initiated various categories schemes such as, income oriented, growths oriented, balanced and so on. Among the diIIerent schemes, it is observed that debt-oriented schemes will continue to dominate the mutual Iund industry as satisIying the needs oI yield, saIety and liquidity. On the other hand, equity oriented schemes may gain their popularity in Iuture expecting rising trend oI stock market position. In India, currently 44 mutual Iund companies are eIIectively Iunctioning with approx. Rs. 8142.68 billion assets under management (AUM). Out oI these Iunds, top5 mutual Iunds are almost managing 53 oI the total assets and the bottom 10 oI mutual Iunds is just contributing even less than 1 oI the AUM. The mutual Iunds are highly concentrated among top 10 mutual Iunds managing almost 79 oI the total AUM. Further, approx. more than 74 AUM are debt/Iixed return oriented Iunds and approx. 26 are all others including equity based Iunds. This shows that the investors in India are mainly interested in Iixed return mutual Iunds which normally are having lesser risk. Around 1229 diIIerent schemes oI mutual Iunds are operating presently in India. Mutual Iund industry in India is just limited to a Iew cities i.e. 74 oI the total investors belong to 5 metro cities and 42 alone in one city, Mumbai. More than 87 oI investors reside in just 15 cities, next 5 in 75 cities, and rest all over the country. The mutual Iunds are centered on metro and bigcities oI India. Further, institutional investors in India are investing in short term and Iixed return gilt-edged securities, whereas the small and retail investors have preIerence Ior equity based and balanced mutual Iunds.
3 Brief Review of Literature For deciding the various parameters to conduct the present study, an intensive review oI the research work and other published literature available on mutual Iunds was made. It helped the researcher to establish a gap between present and Iuture position. Further, the review oI literature assisted in designing research methodology, selecting the sampling technique, analytical tools, Iraming oI hypotheses, interpretation oI results, etc. Review oI literature presented in this study is a brieI description oI research work conducted on mutual Iunds in India and abroad. A brieI view oI around 46 studies Irom abroad and 93 Indian studies carried out till 2013 are described in brieI in this study. The reviews oI the presented studies have brieIly looked at predictability oI perIormance, persistence in perIormance and market timing ability. However, reviews on industry perIormance particularly under the regulated environment are scantly available. Most oI the studies conducted earlier normally examined the perIormance oI the mutual Iunds based on simple statistical tools and risk-return relationship. Their perIormance comparison was made with stock market return, returns oI commercial banks and post oIIices, corporate debentures and government securities. Some studies were conducted on public and private sectors mutual Iunds perIormance. Most oI the popular studies in this Iield have used the models like Sharpe Index, Treynor Model, Jensen`s Alpha, Eugene Fama, Auto correlation, etc. The present study made use oI the well-established analytical tools and models which have been applied in the other prominent studies. Need for the present Study The mutual Iund is an important Iinancial institution which can play a signiIicance role in the development oI any country. II they perIorm in an eIIicient way and to the expectation oI the investing public, then a large number oI investors can be attracted toward these. India's saving rate is above 23 percent, and is considered to be the highest in the world. In India, household sector`s savings is largest among all 4 the sectors. The rate oI conversion oI this saving in investment is very low, i.e. around 7, in comparison to other developed countries. Mutual Iunds are supposed to be the best investment vehicle Ior small investors, but it has observed Irom the market and other reliable sources that mutual Iunds have not reached to their expectations. There is need to study the investors perceptions and Iactors inIluencing their investment decisions. So, in order to identiIy how Iar mutual Iunds satisIy the aspirations oI the investors, this study was initiated. Today it is noticed that a large number oI mutual Iunds schemes have been Iloated in the market. It is very diIIicult Ior an average investor to examine their perIormance. Thus, it is very important to evaluate the perIormance oI the mutual Iunds so that the retail investors can make valued judgment Ior selecting the mutual Iunds Ior their investment purposes. Further, it is also signiIicant to know which mutual Iunds is Iunctioning as the prescribed regulatory norms whether the investment decisions have been taken by the Iund managers as per guidelines, or not. It is essential to ensure due diligence, transparency and saIety in portIolio selection by the mutual Iunds. In the light oI above-mentioned observations, the present study is initiated. Statement of the Problem The present study aims at to answer a Iew questions in this respect. What is the perIormance oI the mutual Iunds in context to their risk and return incurred during the study period? Whether the mutual Iunds have outperIormed the market or not. What is the position oI mutual Iunds perIormance among the diIIerent schemes? Which type oI mutual Iunds are perIorming well and which are below the expectation level ?What are the basic motives Ior investing in the mutual Iunds in India? What is the attitude oI the investors towards the mutual Iunds investment? Whether the investors are satisIied with the perIormance oI mutual Iunds.Whether the mutual Iunds in India are Iollowing the regulatory norms, or not. What is the impact oI regulatory norms on the mutual Iund perIormance? Is the present Iorm oI Iund perIormance inIormation dissemination adequate? These are some questions which the present study attempts to answer. 5 Objectives of the Study The basic objective oI the present study is to evaluate the perIormance oI selected mutual Iunds in India. The perIormance is examined in the light oI three aspects: Iinancing point oI view, investors` point oI view and as per regulatory norms. The speciIic sub-objectives set are as Iollows:- To examine the trends in terms oI growth, size, volumes, etc oI mutual Iunds in India. To evaluate the Iinancial perIormance oI selected mutual Iunds in India. To evaluate the perIormance oI selected mutual Iunds in context to standard perIormance models like Sharpe, Treynor, Jensen, Eugene Fama, etc. To evaluate the perIormance oI mutual Iunds as per investors view. To study the proIile, attitude, preIerences, investment objectives, etc oI the mutual Iunds investors. To examine the impact oI regulations on the perIormance oI selected mutual Iunds in India. To suggest certain measures relating to Iunctioning oI mutual Iunds in India.
Hypotheses and Statements Designed On the basic oI objectives, the study proposes to test statistically important hypotheses designed which are as under: There is no signiIicant diIIerence among the mutual Iund schemes perIormance evaluation as per Sharpe, Treynor and Jensen Models. Index returns and schemes returns are not signiIicantly related. Past perIormance oI the scheme does not have any signiIicant relationship with that oI current perIormance. Investment preIerence is independent oI age groups (Male) towards mutual Iunds. Investment preIerence is independent oI age groups (Female) towards mutual Iunds. Financial need does not depend upon any particular Iactor 6 Investment decisions are not signiIicantly inIluenced by the proIile oI investors. Objective oI selecting Mutual Funds schemes are not signiIicantly inIluenced by the investors proIile. There is no signiIicant impact oI the demographic Iactors on the investment objectives.
The present study also proposes to examine a Iew important statements relating to mutual Iunds as per investors view, which are as under: The proportion oI investors agreeing that investing in mutual Iunds is less risky as compared to shares. The proportion oI investors agreeing that mutual Iunds are more suitable to small investors who are otherwise hesitant oI entering into stock market. The proportion oI investors agreeing that mutual Iunds have the ability to weather the market Iluctuations. The proportion oI investors agreeing that the risk and return characteristics oI Indian mutual Iunds are not in conIormity with their stated objectives. The proportion oI investors agreeing that investing in Iunds is much better in terms oI returns than depositing in bank. The proportion oI investors agreeing that growth schemes are highly preIerred to income schemes. Testing of Hypotheses and Statements of the Study Hypotheses and statements Iramed in the study have been duly tested through appropriate statistical tools, and have mentioned here under: Hypothesis Ho-1: There is no significant difference among the performance evaluation measure of mutual funds as per Sharpe`s, Treynor`s and 1ensen`s Models. In this study, this hypothesis is rejected as there is signiIicant diIIerence in the perIormance oI ELSS, ETF, Equity DiversiIied Growth and other type i.e. Index/Sectorial/Contra mutual Iunds according to Sharpe, Treynor and Jensen Models. 7 Hypothesis Ho-2:Index based returns and schemes returns are not significantly related. This hypothesis is rejected as signiIicant inIluence oI market index is Iound on entire sample schemes oI ELSS,ETF, Equity DiversiIied Growth and other type i.e. Index/Sectorial/Contra Iunds. Hypothesis Ho-3: Past performance of the scheme does not have any significant relationship with that of current performance. This hypothesis is accepted as it has Iound that past perIormance oI private and UTI Iunds does not have any relationship with the current perIormance. Hypothesis Ho-4: Objectives of selecting mutual funds schemes are not significantly influenced by the investor`s profile. This hypothesis is rejected as objectives oI selecting mutual Iund schemes are signiIicantly inIluenced by Investor`s proIile. Hypothesis Ho-5: There is no significant impact of the demographical factors on the investment objectives of the investors. This hypothesis is rejected as there is signiIicant impact oI demographic Iactors on the diIIerent investment objectives oI the investors. Hypothesis Ho-6: Investment preference is independent of age groups (male) towards mutual fund. This hypothesis is rejected as it is Iound that the preIerence Ior mutual Iunds is signiIicantly dependent on the age groups. Lower age males are signiIicantly investing in the mutual Iunds. Hypothesis Ho-7: Investment preference is independent of age groups (female), towards mutual funds. This hypothesis is rejected as it is Iound that the preIerence Ior mutual Iunds is signiIicantly dependent on the age groups. Above 50 years age Iemales are signiIicantly investing in the mutual Iunds. 8 Hypothesis Ho-8: Financial needs of the mutual fund investors don`t depend on any particular factor. This hypothesis is rejected as investors Iinancial need signiIicantly depends on generating Iuture income and Ior emergent needs. Hypothesis Ho-9: Investment decisions are not significantly influenced by the profile of investors. This hypothesis is rejected as there is signiIicantly impact oI Age, Gender, Occupation, Monthly savings and Income is Iound on the investor`s investment decision. Statement-1: Investing in mutual funds is less risky as compare to equity shares. Null hypothesis related with this statement is rejected which means that proportion oI the investors accept that investing in mutual Iunds is less risky as compared to equity shares is more than 50 percent. Statement-2:Mutual funds are more suitable to small investors who are otherwise hesitant of entering into capital market. This hypothesis is rejected, it is Iound that proportion oI investors agreeing that mutual Iunds are more suitable to small investors who are otherwise hesitating oI entering in to capital market and is more than 50 percent. Statement-3: Mutual funds have the ability to weather the market fluctuations. Null hypothesis that proportion oI investors agreeing that the mutual Iunds have the ability to weather the market Iluctuation is more than 50 percent is rejected. Statement-4:Risk and Return characteristics of Indian mutual funds are not in conformity with their stated objectives. Null hypothesis related with statement is rejected and it was Iound that proportion oI investors agreeing that the risk and return characteristics oI Indian mutual Iunds are not in conIormity with their stated objectives is more than 50 percent. 9 Statement-5: Investing in funds is much better in term of return than depositing in banks. Null hypothesis related with statement is rejected as the proportion oI investors agreeing that mutual Iunds provide better returns than bank deposit is Iound more than 50 percent. Statement-6: Growth schemes are highly preferred to income schemes. Null hypothesis related with this statement is rejected as the proportion oI investors agreeing that growth schemes are highly preIerred to income schemes is Iound more than 50 percent. ,Scope of the Study This research work attempts to evaluate the perIormance oI mutual Iund industry in India under the regulated environment aIter the introduction oI the SEBI (Mutual Funds) Regulations- 1996, enIorcing uniIormity in rules and regulations. PerIormance evaluation oI mutual Iund in this study is conIined to three aspects namely, Iinancial, investing public and regulatory body. In Iinancial aspect, the perIormance oI the mutual Iunds is evaluated Irom return incurred by them and their comparison with the stock market index. Investment perIormance oI the mutual Iunds is evaluated through a survey conducted on the mutual Iund investors considering their attitude, satisIaction and other aspects. Finally, the impact oI regulatory measures taken Irom time to time by regulatory authority on the perIormance oI the mutual Iunds.For evaluating the Iinancial perIormance oI selected mutual Iunds, the period oI the study is taken Irom 2002-03 to 2012-13 i.e. April 2002 to March 2013. Research Methodology The present study is conducted by using both types oI primary as well as secondary data. The Iinancial perIormance oI the selected mutual Iunds have been examined through secondary data which were collected Irom the records oI Association oI Mutual Funds oI India (AMFI), Value Research website, Data based websites, companies websites, journals, magazines, and other authenticated published data. 10 To examine the perIormance oI the mutual Iunds Irom investors` point oI view, primary data was collected through a structured questionnaire prepared Ior this purpose. This questionnaire was prepared aIter considering the views oI the investors, Iund managers, oIIicials oI SEBI and Value Research India Private Ltd. and other concerned oIIicers. The questionnaire was tested through a pilot survey among the investors and the brokers. The questionnaire was also revised to elicit the perception oI investors and brokers. To elicit inIormation Irom the investors, all the investors registered at the Karvy Stock Broking Ltd. were contacted between June-2013 and July-2013. 2243 mutual Iund investors were registered members at the various oIIices oI the Karvy Stock Broking Ltd. in its northern region oI India, i.e. Delhi (691), Gurgoan (298), Faridabad (189), Chandigarh (321), Ludhiana (383), Shimla (361). Out oI which 1500 investors (registered members) were approached. 1056 members responded and out oI that 56 responses were rejected due to incomplete in nature. The response rate was 66 percent approximately. Thus, primary sampling Irame Ior this study consists oI 1000 investors, which is adequate Ior evaluating the viewoI the population. The Indian mutual Iund industry came under liberalized environment in the year 1993 with the introduction oI SEBI (Mutual Funds) Regulations. The industry was brought under the uniIorm regulatory Iramework and control with the implementation oI SEBI (Mutual Funds) Regulations 1996. Hence, the study attempts to evaluate the perIormance oI this industry Irom 2002 onwards, aIter the introduction oI uniIorm rules and regulations Ior mutual Iunds in India. To study the Iinancial perIormance oI mutual Iunds, the sampling Irame was selected aIter considering the number oI mutual Iunds, assets under management (AUM) and the schemes oI mutual Iunds currently operating in India. Out oI 44 mutual Iunds companies, 18 mutual Iund companies were selected and 4 categories oI mutual Iund schemes, namely Equity diversiIied (growth), ETF, Tax Savings, and Index/sectorial/contra were selected. On the basis oI types oI scheme, 20 (Equity diversiIied), 10 (Index/sectorial/contra Scheme), 10 (Exchange Traded 11 Fund (ETF)) and 10 Tax Savings (ELSS), intotal 50 schemes were selected. All the mutual Iunds which are having more than 250 crores assets under management (AUM) have been included in the sample. The sample Irame is adequate Ior the present study in order to justiIy the population view. The analytical tools like return, risk and risk-Iree return were used Ior Iinancial perIormance evaluation oI schemes in relation to that oI market as per standard perIormance models as mentioned earlier. In analyzing the risk-return relationship, the CAPM is widely used. Further, various statistical tools like standard deviation, beta, coeIIicient oI correlation, covariance, auto correlation co-eIIicient, co-eIIicient oI determination, etc. have been used to analyze the data. In the present study, various techniques oI analysis such as, Compound Annual Growth Rate(CAGR), Compound Growth Rate (CGR), Rank correlation, Kendall`s Co-eIIicient oI Concordance, Chi-square Test, Z-Test, ANOVA, F-Test, Binomial Test oI SigniIicance, Rank order scoring, etc. have been applied. Findings of the Study In the present study perIormance evaluation oI the mutual Iunds is examined Irom three aspects: Iinancing point oI view, as per investors view and impact oI regulatory norms. Financial Performance Evaluation To examine the Iinancial perIormance the mutual Iunds are classiIied in to Iour categories: ELSS Iunds, ETF, Equity DiversiIied (Growth) Iunds and Index/Sectorial/Contra Iunds. The details oI the Iindings oI Iinancial perIormance oI mutual Iunds category-wise are as Iollows: It is Iound that Tax saving schemes outperIormed the market in terms oI absolute return in diIIerent years oI the study. However, these schemes and the market returns did not provide adequate return to cover risk-Iree return and total risk oI the scheme. Most oI the Iunds perIormed better than the market returns, except ICICI Prudential, HDFC Tax Saver and Birla Tax RelieI 1996 schemes. The perIormance oI the sample schemes were in the same direction as that oI the market as evident 12 Irom the positive beta values. Only Taurus Tax Saver scheme and UTI Tax Saver scheme were observed aggressive with high beta values around 1.8. All the sample schemes were not well diversiIied as depicted by the diIIerences in the Jensen Alpha and Sharpe`s DiIIerential return. All the three risk-adjusted perIormance measures by Sharpe, Treynor and Jensen Models presented average perIormance oI the sample schemes and ensured signiIicant agreement in their ranking. Amongst all the Iunds, ICICI Prudential Tax Saving plan topped the list considering all the three portIolio perIormance evaluation models. It is observed that selected schemes did not earn adequate return in terms oI systematic risk and unsystematic risk, however, they ensured positive returns due to stock selection skills oI the Iund managers. The variance explained by the market was Iound higher Ior UTI Tax Saving Scheme and Taurus Tax Saver Scheme whereas it was less in case oI other selected schemes. The market perIormance was Iound having a signiIicant positive inIluence on the entire sample schemes` perIormance. The present NAV is positively and signiIicantly correlated with the past NAV Ior all the time lags oI all the selected schemes. It means a high degree oI positive correlation in weekly time lag exists and gets reduced as the time lag increases Ior all the selected schemes oI mutual Iunds.Similar results were obtained by Mishra & Mahmud (2002)by using partial movement method. They presented that perIormance oI mutual Iunds under study were not upto the mark when lower partial movement method was applied to risk and return oI ELSS Iunds. Muthappan&Damodhran (2006) presented that perIormance oI mutual Iund is lower than 91 days Treasury bill rate when they were tested on the Sharpe & Jensen`s Alpha model. During the study period, the selected Exchange Traded Funds (ETF) schemes outperIormed the market in terms oI absolute returns in diIIerent years. But these schemes and the market return did not provide adequate return to cover risk-Iree return and total risk oI the scheme. It is examined that the schemes perIormed better than the market return. Except GS NiIty BeES ETF, GS Junior BeES, GS Bank BeES schemes, rest all other selected schemes did not ensure expected returns 13 rather under perIormed. The perIormance oI the selected schemes was observed in the same direction as that oI the market as evident Irom the positive beta values. Only GS NiIty BeES ETF scheme was aggressive with high beta values around 1.12. All the sample schemes were not well diversiIied as depicted by the diIIerences in the Jensen`s Alpha and Sharpe`s DiIIerential Return. All the three risk-adjusted perIormance measures by Sharpe, Treynor and Jensen Models depicted average perIormance oI the selected schemes and identiIied signiIicant agreement in their ranking. Out oI the selected schemes studied, GS NiIty BeES saving plan topped the list in the case oI two portIolio perIormance evaluation models. On evaluating the risk-return relationship, all the sample schemes did not provide adequate return in terms oI systematic risk and unsystematic risk. However, the selected schemes showed positive returns due to stock selection skills oI Iund managers. The variance explained by the market was more in the case oI Kotak Sensex ETF, ICICI Sensex Prudential ETF etc. while it was less in other sample schemes.Fernandes K. (2003) also explained the same that return is lower in case oI Index Iunds when tested with Sharpe`s & Treynor`s model. Jensen Alpha though shows better stock selectivity in some selected index Iunds. While examining the results and analysis, it is Iound that during the study period, the selected Equity Diversified (Growth) Funds outperIormed the market in terms oI absolute returns in many years. But these schemes, and return shown by the market index, did not provide adequate return to cover risk-Iree return and total risk oI this category oI the scheme. Schemes, selected in the study perIormed better than the market. Except HDFC Top 200 Growth, Reliance Vision, Reliance Growth, all the other selected schemes did not ensure expected returns. The perIormance oI the sample schemes were in the same direction as that oI the market as evident Irom the positive beta values. HDFC Long Term Advantage, HDFC Prudence, SBI magnum Global, UTI Balanced Growth Fund and UTI CCP Balanced Scheme were Iound aggressive with high beta values. All the sample schemes were not well diversiIied as depicted by the diIIerences in the Jensen Alpha and Sharpe`s DiIIerential return. 14 Similarly Singh &Vanita(2002)Iound that most oI the investors still holding public sector mutual Iunds due to high volatility in the schemes, it is risky but they think there is a high chance oI better capital appreciation by keeping UTI schemes. But they also mentioned that large proportion oI investor invested in private mutual Iunds in comparison to UTI schemes. Similar results were mentioned in the research by Bansal M. (2003) and Anand and Murugaiah (2008).All the three risk- adjusted perIormance measures by Sharpe, Treynor and Jensen Models depicted average perIormance oI the selected schemes and ensured signiIicant agreement in their ranking. Further, out oI these, HDFC Top 200, Reliance Vision and Reliance Growth Fund plan topped the list in the case oI two portIolio perIormance evaluation models. Comparing the return with the actual risk incurred, it is observed that all the sample schemes did not provide adequate return in terms oI systematic risk and unsystematic risk. However, the selected schemes ensured positive returns due to stock selection skills oI Iund managers. Further, the variance explained by the market was higher in case oI Reliance Vision and Reliance Growth, while it was lower in case oI all other sample schemes oI the study. In the present study, other than the ELSS, ETF and Equity diversiIied (Growth) schemes, other Iunds belonging to diIIerent categories like Index/ Sectorial/ Contra, etc. are selected to evaluate the perIormance oI mutual Iund, in general, while examining their results oI the analysis, it is Iound that these Iunds have outperIormed the market in terms oI absolute returns in many years. However, these schemes and the market return did not provide suIIicient return to cover risk-Iree return and total risk oI the scheme. Schemes, in general, perIormed better than the return oI the market. Except SBI Magnum Contra, Franklin India Prima and ICICI Dynamic Regular, the other selected schemes did not ensure expected returns. The perIormance oI the sample schemes were in the same direction as that oI the market as evident Irom the positive beta values. However, UTI NiIty Index Fund, L & T India Special Situation and SBI Pharma were Iound aggressive with high beta values more than one. All the sample schemes were not well diversiIied as depicted 15 by the diIIerences in the Jensen Alpha and Sharpe`s DiIIerential return. All the three risk-adjusted perIormance measures by Sharpe, Treynor and Jensen Models depicted average perIormance oI the selected schemes and ensured signiIicant agreement in their ranking. OI the selected schemes studied, Franklin India Prima Fund, SBI Magnum Contra and ICICI Dynamic Regular Fund Plan topped the list in the case oI two portIolio perIormance evaluation models. All the schemes oI the study did not provide adequate return in terms oI systematic risk and unsystematic risk. However, the selected schemes ensured positive returns due to stock selection skills oI Iund managers. The variance explained by the market was Iound more in the case oI Franklin India Blue Chip Fund and SBI Contra, while it was less in the case oI other selected schemes. Performance Evaluation as per Investors` View To evaluate the perIormance oI mutual Iunds Irom the investors point oI view, an opinion survey was conducted to study the proIile, attitude, preIerences, objectives, satisIaction, etc. oI the investors who have invested in mutual Iunds. The major Iindings oI this survey were as Iollows: While examining the proIile oI the investors, it is Iound that major group oI investors belongs to 40-60 years age which is 51.4 oI the total. Further, the senior citizens above the age oI 60 years are Iound only 12 oI the total investors. It indicates that mutual Iunds are not much popular among senior citizens and retired class. On the evaluation oI gender oI the investors, it was noted that 72.9 oI the total are male population which indicates that mutual Iunds are very much liked by the male investors. It is observed that 70.8 oI the investors are married and 29.2 belongs to unmarried category. It observed that younger investors are still keeping distance Irom investing into mutual Iunds. Regarding earning level oI the investors, it is noted that 39.6 oI the investors are in the range oI Rs. 25000-50000 earning per month, whereas it is 20.1 in the above Rs. 50000/- per month category. It means the earning capacity oI the 16 investors is not very high, that is considered to be moderate. So, our respondents in this study normally belong to middle class. it is observed while examining the saving pattern oI the investors, 42.8 oI the investors belong to Rs. 5000-10000 savings per month. 15.3 Iound earning more than Rs. 10000/- per month. On the evaluation oI earnings, it is noted that savings oI the investors are not very high, and so they may be reIerred as small investors. While observing the investment pattern oI the investors, it is noted that 68.5 oI the investors like to invest their savings in the real estate such as, land and other physical assets. They are attracted more towards real estate investment Iollowed by investment in gold and silver. It means the investors preIerences are changing and shiIting towards real estates and gold. Investment objectives oI investors while investing in the mutual Iunds, 51.2 percent oI the respondents preIer to have balanced income and growth` Iollowed by Iirst priority Ior income and aIter that growth" by 26.4 percent. It indicates that most oI the investors preIer to 'have regular income Irom the investment in mutual Iunds. Risk tolerance is basically investors' Ieeling oI comport in investment. While examining the investors` attitude towards risk, it is observed that 52.3 percent oI investors preIer to accept average volatility Ior average return, and 24.6 oI them accept little volatility Ior higher return. It is noted that most oI the investors are risk averse and invest in the mutual Iunds with moderate risk. On the choice oI investment assets, the investors still do not preIer to invest in mutual Iunds rather they like to invest in real estate. Mutual Iunds investment was ranked 5 th amongst all other modes oI investment. It means that mutual Iunds still could not reach to the expectation oI the investors. Investors opinion on degree oI saIety oI Iinancial assets, it was Iound that Land and other physical assets category had the highest degree oI saIety, Iollowed by Iixed deposits and recurring deposits On the comparison oI various objectives like return, stability marketability, tax beneIits and diversiIication Ior investing in the mutual Iunds, it is Iound that 78.8 17 oI the investors go Ior tax beneIits, 59 preIer saIety and 48.9 Ior objective diversiIication. It is concluded that tax beneIit is most preIerred objective Ior investing in mutual Iunds. Mutual Iunds in India are sponsored by various sectors, like commercial banks, Iinancial institutions, private Indian companies, private joint ventures, private Ioreign ventures, etc. On the evaluation oI preIerences oI the investors Ior the sponsors in Indian private joint venture is observed the best choice, as ranked Iirst amongst the sponsors. While investing in mutual Iunds, the investors require a lot oI inIormation and data Ior analysing the schemes. Such inIormation are available through various sources. On examining such sources, it is Iound that 58.7 oI the respondents depend on inIormation provided by the Iriends/relatives, Iollowed by brokers/agents scoring 45.6. It shows lack oI conIidence and competency at the level oI investors. On the evaluation oI seventeen beneIits oI investing in mutual Iunds, there were Iour beneIits which were stressed by almost all the respondents. These Iour beneIits are: transparency in the operation, assured allotments, innovations in products and transIerability. First Iactor alone covered 41.831 percent oI the total variance. On the analysis oI various Iactors which determine the success oI mutual Iunds Irom the investors point oI view, it is Iound that suitability oI product, scored as the most important Iactor, Iollowed by the risk orientation. It means the investors Iirst examine the Ieatures oI the product, and rest aIter that. The satisIaction level oI the investors towards mutual Iunds was examined by taking three parameters i.e. perIormance oI mutual Iunds, investment opportunities and Investors services rendered. Out oI these, investors service is ranked at No. 1 by the investors. It means that the services rendered by the mutual Iunds are Iound highly satisIying to their investors. The perIormance evaluation oI mutual Iunds Irom the investors point oI view; it is observed that 67.9 oI the investors have invested in mutual Iunds Ior 1-3 years, and Ior, less than are 1 year, Iound 29.4 oI the investors. It means the investors 18 mostly select the mutual Iunds only Ior short period rather than Ior long period, i.e. above 3 years. During the survey, it is observed that all the sample investors invested in the 69 mutual Iund schemes out oI the total schemes around 1230 Iloated in the country so Iar. Further, out oI these schemes, the most preIerred scheme was Iound 'Equity- Based Fund with a 57.8 oI the investors. On the amount oI investment made in mutual Iunds, it is Iound that 44.8 percent oI investors invested between Rs. 1 lakh to 3 lakh Iollowed by 28.4 invested below one lakh. It is Iound that invested amount is not signiIicant in mutual Iunds which indicate toward lower conIidence oI investors towards mutual Iunds. The whole investors oI the study have invested in total 69 mutual Iund schemes, and out oI which a major Iunds has been invested in top 10 mutual Iunds schemes. It is observed that amongst the large number oI schemes available in the market, only a very Iew schemes especially in Growth oriented Index schemes and Tax Saving Funds Iound to be preIerred choice oI the investors. Impact of Regulatory norms on performance of Mutual funds The impact oI regulatory norms on the perIormance oI selected mutual Iunds is evaluated in this study. The evaluation oI the regulatory norms considers the cost incurred by the mutual Iunds while Iollowing them. The cost oI these norms depends upon their stringent or degree oI strictness. Such costs are classiIied into direct and indirect costs. Direct costs are the expenses incurred by the mutual Iunds on compliance oI these norms. For instance, the compliance costs include the administrative cost oI the trustee board, inIormation sent to shareholders and disclosure costs incurred on personnel, printing and mailing. Indirect costs involve the possible negative eIIect oI regulatory constraints like, limits on investing in companies portIolio selection, portIolio disclosure, etc. which may inIluence the proIitability oI the scheme and behaviour oI the investors. It is observed that SEBI regulations are stronger in comparison to the UTI regulations, but resulting into less costly Ior the investors. Too costly here is 19 implied to mean that the net beneIits arising out oI preventing Iraud and malpractices on the investors through selI interested opportunistic portIolio selection are Iound less than the total cost. This analysis is made with the help oI certain tools and models like Average Composite Returns, Sharpe ratio, InIormation Ratio (IR), ModiIied InIormation Ratio (MIR), Jensen's Alpha, F-Statistics, Hausman Test and Poolability Test. The IR and MIR show the return to the risk taken by the Iund manager Ior deviating Irom the market risk, or it is the return Ior only the Iund manager's selectivity skill and not the general market movements. These have been applied aIter suitably modiIying the data. In this study, 50 mutual Iunds schemes were selected, in which 8 mutual Iunds belong to UTI and rest 42 mutual Iunds belong to private sector governing under the SEBI Regulations. The comparison oI the perIormance oI the mutual Iunds is made beIore 2003, and aIter 2003 till 2013. The Iindings oI this study is biIurcated into Iour categories oI mutual Iunds, i.e. ELSS Iunds, ETF Iunds, Equity diversiIied (Growth) Iunds and Index/Contra/Sectorial Iunds. The total ELSS Iunds are ten, out oI which one Iund (UTI Tax saving) belong to UTI group. It is observed that inIormation ranking and modiIied inIormation ranking showed the most negative return indicating toward poor selectivity skills oI the Iunds managers in comparison to the other private mutual Iunds. Among the second category oI mutual Iunds relating to ETF, all the ten schemes belong to private mutual Iund and no Iund belong to UTI group. However, on their inter-comparison oI stock selectivity, it is observed that all the Iunds have negative Sharpe ratios showing poor selectivity skills oI Iund managers. Analysing the IR and MIR oI these Iunds, it is Iound that ranking oI ICICI Prudential ETF changed Irom 5 th to 6 th ranking, and oI G.S. NiIty BeES changed Irom 6 th to 5 th ranking, and G.S. Liquid schemes gave the most negative returns Ior the manager's selectivity skill. On the comparison oI the 20 equity-diversiIied (growth) schemes oI the sample, it is Iound that 4 mutual Iunds belong to UTI group, i.e. UTI Master-share, UTI Master Value, UTI Balanced Growth and UTI CCP Balanced Fund, rest belong to private category. All the Iour UTI Schemes and six other mutual Iunds showed the negative 20 Sharpe Index. Rest other selected 10 Iund have positive Sharpe ratios and showing also higher ranking than the index. Ranking oI Iunds in terms oI IR and MIR are changed. Ranking oI UTI Master-share, UTI Master Value and UTI CCP Balanced Fund changed Irom 14 th , 16 th and 20 th to 12 th , 11 th and 18 th respectively. In case oI UTI CCP Iund, it showed the most negative return Ior the manager's selectivity skills. Other private Iunds governing under SEBI norms, showed good result in the Iorm oI positive MIR values. In the last category oI mutual Iunds, 3 units, i.e. UTI Banking Sector, UTI NiIty Index Fund and UTI Opportunity Fund belong to UTI group and rest other 7 units belong to private mutual Iunds category. It is observed that UTI NiIty Index Iund had highest negative Sharpe ratio (-1.9073), UTI Banking sector had (-0.8781) and only UTI Opportunities Fund had positive Sharpe ratio (0.0793). Other Iour private sector mutual Iunds also had negative Sharpe ratios, showing poor perIormance than the index. The ranking oI Iunds in terms oI IR are same as that oI Sharpe ratio. But rankings are changed as per MIR, but the UTI mutual Iunds showed the very poor results. In this respect, UTI NiIty Index gave the most negative returns Ior the Iunds manager's selectivity skills. Other private Iunds indicated good results in the Iorm oI positive MIR value which represented better Iund manager's selectivity skills. To carry out the empirical analysis, poolability test oI data is needed. For this, F- Statistics and Hausman speciIication test are applied. The calculated value oI F is greater than tabulated value in case oI private Iunds which showed that F test is signiIicant or the data is not poolable. Whereas, it is observed that value oI F-Test, the calculated value is less than tabulated value and thus, F is insigniIicant in case oI UTI Iunds, thus, showing that the data is poolable. Further, Jensen Alpha is Iound negative Ior UTI Funds indicated that these Iunds have inIerior stock selectivity. In brieI, perIormance oI the UTI regulated Iunds beIore 2003 was observed better than SEBI regulated Iunds, but the perIormance oI the UTI Iunds decline drastically when the UTI Iunds came under the regulation oI SEBI aIter 2003. This means that 21 due to more transparency, more disclosure, stronger regulatory norms, management cost etc. the UTI Mutual Funds under perIormed, whereas private mutual Iunds regulated under SEBI norms perIormed better showing more dynamism in the portIolio selection and returns to the investors. Suggestions On the basis oI the Iindings oI the present study, the important suggestions are as Iollowing: Most oI the sample schemes oI mutual Iunds have shown negative alpha values which shows that the Iund managers Iail to Iorecast appropriate security prices in times, which result in poor perIormance. It is suggested that the mutual Iunds should strengthen their Research and Development Department in order to have better Iuture projections. Mutual Iunds as institutional investors should provide the superior return in comparison to the market return by ensuring proIessional market analysis, optimum diversiIication oI portIolios, minimizing oI risk and investing at proper time. The mutual Iunds must ensure not only good perIormance over the market, but also consistency in their return. This is possible only when latest techniques and models oI Iorecasting be Iollowed by the Asset Management Companies while making their Iuture projections. The mutual Iunds still could not build required conIidence among the existing unit holders due to their poor perIormance and lack oI transparency. The mutual Iunds should appoint only competent, Iully qualiIied and well experienced in Iinance market Iunctioning as their Iund managers. Households` savings in India have not been channelized properly and remain unproductive, in general, especially in rural and semi-urban areas. The mutual Iund industry can play a signiIicant role in this respect. ThereIore, they should open their branches in such areas which can help the potential investors to make direct investment in the mutual Iunds without any intermediary. 22 The mutual Iund investors in India belong to middle class, and donnot have good exposure in the Iield up investment management. They are also not aware oI recent developments in the capital markets. So, there is an urgent need Ior making an extensive campaign and publicity in this respect. The Central Government, SEBI, AMFI, mutual Iund companies etc. should take necessary steps to educate the people in the Iield. Mutual Iund companies should make eIIorts to link their activities with the banking institutions in order to accelerate their operation through electronic clearing and plastic money. They should provide greater liquidity to the investors. Most oI transactions be perIormed with the help oI CAMS service providers. Mutual Iunds are not Iound very much popular among senior citizens and women in our country. It is suggested that the Government and SEBI should make arrangements Ior massive educational and awareness programmes so that they can be motivated to invest in these Iunds. It was observed in this study that major source oI inIormation Ior the investors decisions were 'Friends/Relatives' and 'Brokers/Agents' which could not be considered as reliable sources. ThereIore, the regulatory authorities should take necessary steps to provide all types oI inIormation relating to the mutual Iunds and other investment avenues through various print and electronic media, so that the investors may take well inIormed and judicious investment decisions themselves. Mutual Iund industry in India is highly concentrated in Iive metro-cities oI India. It means that still the mutual Iund industry could not become popular in the other cities, rural and semi-urban areas. It is suggested that SEBI and Central Govt. should take concrete steps to educate the so that the household savings in India be channelized towards mutual Iunds. Though recently, the SEBI has taken various important decisions to popularize the mutual Iunds in the country, Ior example, it has mandated Ior the AMCs to set asidesuchas, at least 2bps oI their daily net assets, annually Ior the education campaign & awareness, relaxing the mandatory requirement oI a permanent account 23 number (PAN) or bank account Irom the investors, mandated a single expense structure, eliminating the service tax on AMC, etc. However, these are not- adequate; some more eIIorts are desired at the SEBI level in order to attract large number oI investors in semi-urban and rural areas. Regulatory norms Ior distributors, agents and brokers be relaxed so that they should take more interest in promoting the investment in mutual Iunds. Some extra special concessions interms oI service tax, Iee, additional total expense ratio (TER) be provided to expand the geographical network oI mutual Iunds in India. Scope for further Research Studies Though an attempt has been made in this study to examine the perIormance oI selected mutual Iunds in India Irom diIIerent aspects, yet there is an ample scope Ior Iurther research work and investigation in this Iield. A Iew such areas are explored here as under: In this research study, Iour diIIerent types oI mutual Iund schemes were studied, hence, Iurther research studies could be initiated on other schemes Iloated in the market. The money market mutual Iunds are Iound recently high active and managing signiIicant assets in the market.Yet no extensive research work is conducted exclusively in these Iunds. So there is ample scope to pursue research in these Iunds in order to initiate Iurther development in money market oI India. In the present study, Northern region oI India was included Ior studying the investors` attitude and preIerences related to mutual Iunds. ThereIore, such type oI research work can be explored by incorporating the investors oI other regions oI the country. No adequate research studies are conducted on Ioreign and oII-shore mutual Iunds. So, there is a lot oI scope to initiate research work in this Iield. Further, a comparative study oI Indian mutual Iunds with the oIIshore Iunds could also be initiated. 24 The role oI Ioreign institutional investors (FIIs) is rising in Indian stock markets, which are inIluencing stock prices a lot,Hence, Iurther the research work can be initiated to explore the role oI mutual Iunds in terms oI their inIluences on stock market sentiments. There is need to undertake an in-depth study on status and Iunctioning oI mutual Iunds at micro-level in India, so that real problems oI investors, Iunds managers, brokers can be judged. The research study can be initiated to have inter-industry comparison like between mutual Iund industry with banking industry, insurance companies, Iinancial institutions and venture capital Iunds. In the past, a lot oI merger and acquisition in the mutual Iund industry has been witnessed. So, in order to know their impact on mutual Iunds perIormance, there is ample scope to initiate research in this area. Above are the important possible areas oI mutual Iunds where Iurther research work can be encouraged.