Advantages Economic reforms and mutual fund growth in india Review of literature Need of study Objectives and scope

of study Hypothesis Research designLimitations Chapter scheme References

Chapter 5 Findings an directions for further research This chapter delivers the findings of the study. Finally, some directions for further research in this area have also been put forward. This section summaries the main findings of the study: 1. The results, in terms of rate of return measure and risk adjusted performance measures of Sharpe and Treynor, support the hypothesis that the sample mutual fund schemes in India outperformed the market during the sample period, i.e. April 2007 to March 2011. The superior performance of mutual fund schemes could be due to robuststock market growth, continued foreign institutional investments, strong macro-economic fundamentals including improvement in GDP and so on. This shows that investors confidence in mutual funds has significantly improved. 2. The results in terms of stock selectivity did support the hypothesis that the mutual fund managers in India have superior stock selection skills by showing positive alpha values. 3. The results pertaining to market timing abilities of the fund managers shows that fund managers in India deliver significant market timing ability. The results do support the

hypothesis that the fund managers in India display distinct timing abilities during the study period. 4. Further , the results have shown a little evidence of performance persistence of the sample mutual funds and thereby, reject the hypothesis that mutual fund returns in India persists. Most of the mutual funds failed to persists. The reason for not showing persistence in performance may be due to the domestic economic conditions and international pressures. On behalf of investors, mutual funds invest their savings in the stock market to earn positive returns in future, but nobody can predict the market with certainty.

Table 5.1 presents the summary of results for hypothesis of the study.

Table 5.1: summarization of the results for hypotheses

Hypotheses

Results

H1

The performance of sample mutual fund schemes in India is superior in comparison to the relevant benchmark portfolio

Supported

H2

Mutual fund managers of the sample schemes in India have superior stock selection abilities

Supported

H3

Mutual fund managers of the sample schemes in India display distinct market timing abilities

Supported

H4

The returns on sample mutual fund schemes in India are persistence

Not Supported

Directions for future research

1. The present study can be extended by taking a larger sample of both open-ended as well as close ended schemes. The study period can also be extended. The analysis can be done by applying multi-factor models like Fama-French three factor model and Carharts four factor model. 2. One can evaluate the performance of mutual funds on the basis of different fund characteristics such as fund size , fund age, turnover, management and load fees etc. 3. One can also analyse the market timing by examining the daily data instead of monthly data, as used by Bollen and Busse( 2001). 4. One potential are for future research is how the emergence of exchange trade funds affects the performance, timings and persistence of mutual funds. 5. Evaluation of corporate governance and CSR standard on the performance and growth of mutual fund companies can be undertaken. Further one can conduct a study whether mutual fund companies follow these standard fairly. Another area for future research is how the increased scrutiny and regulations affect the performance persistence. Also whether the investors have the knowledge of such regulations. 6. On can not only evaluate the performance of individual mutual fund schemes but also evaluate the aggregate performance of fund families.