Conventional and Non-Parametric Performance Perspectives of Indian Mutual Fund Schemes

Abstract

The present study emphasises that evaluating the efficiency of mutual fund managers requires consideration beyond the usual risk-adjusted performance indicators. An important aspect influencing investor returns is the fund’s operating cost structure. When these expenses are not handled effectively, a substantial portion of the gross return is absorbed by management processes, thereby reducing the final return available to investors. To address this, the analysis incorporates a non-parametric approach – Data Envelopment Analysis (DEA) – to evaluate the cost-management efficiency of Indian mutual funds alongside conventional parametric measures. The dual approach – combining performance ratios with cost-efficiency evaluation – reveals that Reliance Vision and Reliance Growth are the most consistent and efficient performers among all the schemes examined. These funds not only recorded favourable scores on standard performance benchmarks but also demonstrated superior cost management during the study period. Thus, it can be concluded that while a few funds display strong managerial efficiency and competitive performance, the Indian mutual fund sector on the whole exhibits limited evidence of widespread excellence or uniform competitiveness.

Keywords: Cost Efficiency, Data Envelopment Analysis (DEA), Mutual Funds, Performance Evaluation, Risk-Adjusted Performance

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