A Study of the Performance of Mutual Funds Industry in India for the Period of 1998 2008

Abstract

In the backdrop of liberalization and private participation in the Indian mutual newlinefund industry, the challenge to survive and retain investor confidence has been a prime newlinearea of concern for fund managers. For small investors who do not have the time or the newlineexpertise to take direct investment decision in equities successfully, the alternative is to newlineinvest in mutual funds. The performance of the mutual fund products become more newlinecomplex in context of accommodating both return and risk measurements while giving newlinedue importance to investment objectives. newline1.1. The role of finance in economic growth newlineThe financial system acts as an efficient conduit for allocating resources among newlinecompeting uses. The role and importance of the financial sector in the process of newlineeconomic growth has evolved overtime along with the changing paradigms. Till the late newline1960s, the role of financial intermediaries in general and banks in particular, in the newlineprocess of economic growth of a country was largely ignored. The views on neutrality of newlinefinancial intermediaries to economic growth, however, came under attack during the late newline1960s. It was pointed out that there exists a strong positive correlation between financial newlinedevelopment and economic growth of a country1and2. The McKinnon-Shaw paradigm newlinehighlighted the negative impact of financial repression under which the government newline1 McKinnon,R.C., Money and Capital in Economic Development , Washington D.C, Brooklings newlineinstitution, 1973. newline2 Shaw,G., Financial Deepening in Economic development , New York, Oxford university press, 1973. newlinePage | 2 newlinedetermined the quantum, allocations and price of credit on the growth process. They newlineargued that credit is not just another input and instead, credit is the engine of growth. newlineSubsequently, the proponents of endogenous growth theories argued that with positive newlinemarginal productivity of capital, development of financial market induces economic newlinegrowth in the short as well as long run by improving efficiency of investment3. Under this newlineapproach, efficient financial inter