A Study of the Return Generated and Managerial Efficiency of Select Mutual Fund Schemes in India.

Indian Mutual Funds are playing a very crucial developmental role in allocating resources in the emerging market economy.Mutual funds act as a financial intermediary in fund mobilization and investment.The essence of a Mutual Fund is the diversified portfolio of investment which diversifies and reduces the risk by spreading out the investor's money across available or different types of investments.This study analyzes the behaviour of few selected Mutual Fund Schemes during the period of December 2008 to December 2012 in comparison to Sensex Return.I have also analysed the managerial efficiency in stock selection through Alpha, Beta and RSQ and their variability for each of these mutual funds in this period.It is generally believed that mutual funds are less volatile as the managers use their expertise in selecting the appropriate stocks for the mutual fund portfolio.The data is analyzed using Pearson's Product Moment Correlation Method, the coefficient of variation of the return generated by the Sensex and the Mutual Fund Schemes to determine a more stable series and ANOVA for the variation in Alpha, Beta and RSQ of the funds.It was found that in the given study period the variability in the return of the Mutual Fund Schemes are between moderate to high and thus these Mutual Fund Schemes may not be as stable as they seem to be and the fund managers were not so efficient in selecting stocks for all the funds.The investors should weigh their options carefully before deciding to invest in a Mutual Fund.