Design of performance measurement framework for Indian mutual funds

Abstract

Abstract The India Mutual Fund industry has grown quite rapidly in the past four years and recently this has been followed by an increasing awareness among st investors about fund rating and performance measurement .Fund Rating systems generally employ the more common measurementations such as Sharpe and Fama but there are more comprehensive rating systems such as the Morningstar Risk Adjusted Rating and the CRISl rating systems . The study provides an insight into these and other rating methods and has applied the broad based measures to the Indian Funds in the past two years The study clearlu indicates that the funds have in the long run been unable to vecat the market with any dignificance and many funds actually have negative value addition in terms of active management . The study also provides evidence to support a shorter duration and market condition based analysis of funds especially using measures such as the sharpe Given the growth in comprehensive financial databases the study demonstrates measures that use Active vs Passive portfolio comparisons and that which correlate pectoral performance to sectoral allocation. These measures clearly provide information regarding foresight and selectivity that is different from the regular measures and it is recommended that these measures be incorpotated as a part of the integrated financial databases.