An evaluation of tax oriented mutual funds (Equity linked saving schemes) in India

This study aims to examine the performance of open-ended tax oriented Equity Linked Saving Schemes in India. To evaluate the performance of funds a sample of 20 schemes has been selected on the basis of monthly returns compared to benchmark returns. For this purpose statistical tools average, standard deviation, beta, co-efficient of determination, systematic and unsystematic risk and the risk adjusted performance measures suggested by Treynor (1965), Sharpe (1966), Jensen (1968) and Fama's (1972) measures are employed. The return analysis reveals that most of the schemes could not perform better as compared to the benchmark. Whereas the variability in return of schemes is more than the variability in return of market. The beta value of the schemes is less than one which indicates that these are defensive schemes in nature and less sensitive to the market forces. It is found that only 20 percent schemes performed better according to Sharpe, Treynor and Jensen measures. On the basis of R², the schemes are well diversified which reduced the unsystematic risk. These funds are found to be poor in earning better returns either adopting marketing or in selecting under priced securities.