Performance of index funds in India

Mutual Fund is a trust that pools money from a group of investors (sharing common financial goals) and invest the money thus collected into asset classes that match the stated investment objectives of the scheme. Index Funds (IFs) focuses on the performance of specific stock indices, as opposed to other types of ETFs that are based on oil or other commodities. Index funds spread the risk factor over the entire index, As such; large institutional investors like pension funds as well as older individual investors who are looking to reduce the risk in their portfolios often find Index Funds a preferable alternative to buying stock of individual companies.

The study is based on secondary data covering a period of 14 years for Index Funds i.e. 1999 to 2012 to reflect upon the growth of Index Funds over a period of time since their inception.

The parameters for evaluating the performance are Net Asset Value, standard deviation, Return, Beta, Reward to Variability (Sharpe) and Treynors Performance Evaluation Ratio. The statistical tools like Standard Deviation, Beta, Sharpe Ratio, and Treynors Ratio are used for data analysis.