Performance of Indian Mutual Funds : An Empirical Study of Select Equity Linked Saving Schemes

Abstract

Main features of Equity Linked Saving Schemes (ELSS), which are just like diversified equity mutual funds, include tax-saving benefits under section 80C of the Income Tax Act, no implication of dividend distribution tax (DDT) and long-term capital gains (LTCG) tax, and lock-in-period of three years. The primary objective of the study is to examine the performance of the chosen schemes in the line of risk-return parameters. The study is based on secondary data. The period of study is from September, 2004 to September, 2014. Measures like Sharpe Ratio, Treynor Ratio, Jensen alpha, and Sharpe Differential Measure (SDM) have also been applied. The schemes have generated superior risk adjusted return, are defensive in nature, and are adequately diversified. Further, most fund managers have superior stock picking skills. Returns from "Systematic Investment Plan" (SIP) are very much satisfactory. Finally, overall performance of the schemes is satisfactory in comparison to the benchmark.