Comparing Returns Between Large and Mid & Small Cap Equity Mutual Funds in India

Dr. R.S. Rai; Dr. T.V. Raman; Mr. Gaurav Shreekant

Volume : IV, Issue : XII, December - 2014

Comparing Returns Between Large and Mid & Small Cap Equity Mutual Funds in India

Dr. R. S. Rai, Dr. T. V. Raman, Mr. Gaurav Shreekant

Abstract :

Mutual funds are increasingly becoming popular vehicles of investments in financial markets worldwide. In this paper we attempt to test two popular beliefs w.r.t. mutual funds performance. The first belief being that the ‘mid and small cap’ funds provide higher returns to investors than the ‘large–cap’ funds. The second belief being that active management of funds by fund mangers results into superior returns by funds than their respective benchmark indices. In the present study an attempt has been made to compare the performance of returns of ‘largecap’ and ‘mid & small–cap’ equity mutual funds in India between them as well with their benchmark indices over one, three and five year time durations. In all, 40 equity open ended mutual fund schemes are selected – 22 large–cap and 18 ‘mid & small–cap’ schemes and their annualized over last 1, 3, and 5–years are compared. It is observed that the ‘mid & small–cap’ schemes performed significantly better than the ‘large–cap’ schemes over all the three selected periods. It is also found that during all the three time durations, the average annualized returns of in both of the selected categories to be significantly superior to their respective benchmark indices.