A study on risk-return relationship of mutualfund equity schemes

The relation between risk and return determines the performance of a mutual fund. As risk is commensurate with the acceptable associated risk level it helps in demarcating the better performer among the prevailing players. Mutual funds invest according to the underlying investment objective as specified at the time of launching a scheme. The objective of the equity scheme is capital appreciation. The investors will get return only when the fund is earning from its investments. Hence the risk is higher. The objective of the study is to evaluate the performance of selected mutual fund equity schemes based on Risk and Return. For the study 55 open ended growth oriented equity schemes were selected from both private and public sector mutual funds. To analyze the risk adjusted performance of mutual fund schemes the variables like Net Asset Values (NAV), BSE Bench mark index, Risk- free return, and market portfolio return were used. The performances of selected schemes were evaluated against Risk free rate of return and BSE -100 index. The average Fund return and Fund risk of selected equity schemes were higher than average market return and market risk. Comparatively private sector funds performed better than public sector funds.