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The mutual fund industry in India has proliferated due to factors such as infrastructure development, increased participation of foreign investors, etc. It has become one of the fastest-growing sectors in the financial market of India. With growth comes competition, and with increasing competition, there are a greater number of funds operating in the market. Typically, an investor is suggested a combination of funds to choose from, and with the limited information, he tries to create a well-diversified portfolio. This creates a challenge for the investor to select a fund that does well in an emerging market like India, which has a volatile financial market, frequent transition in business or economic cycle, and a financial or global crisis affecting the stock market every ten years. The main objective of the study is to evaluate MNC mutual funds' performance, stock selection and market timing skill by using Sharpe ratio, Treynor ratio, information ratio, M2 model, Sortino ratio and Treynor Mazuy model. The data for the study are taken from Bloomberg. The study evaluates MNC mutual funds' performance based on their daily NAV for the period 2010 to 2019. The findings suggest that MNC funds perform better than the market and other theme-based mutual funds in India for most of the time frame. Our findings have significant relevance for stock market participants.
Key Words: Financial Markets, Investment Decision, Mutual Funds, Performance Evaluation, Portfolio Management
(ProQuest: ... denotes formulae omited.)
INTRODUCTION
In 2014, when Narendra Modi took charge of the country, the economy was still recovering from the 2013 twin deficit (current account deficit and fiscal deficit). Growth fell to a low of 4.4% in 2013, and inflation was as high as 10%. The current account deficit led to Indian rupee devaluation despite close to 0% interest rates in the US and Euro Zone. The economy had its fair share of the bad debt problem, which slowed investment and a high unemployment rate of 8%. Factors such as global trade war between China and the US, restriction on migration imposed majorly by the US, the fragility of growth in debt-ridden emerging market economies such as China and India, etc., have led to the global slowdown. In 2019, the growth was again merely 5%, which was due to...