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Performance Evaluation of Some Index Funds-Indian Perspective

Author

Listed:
  • Pranav Mishra

    (GLA University)

  • Gulab Singh

    (GLA University)

Abstract

The popularity of the index funds as an investment option has increased manifolds ever since they were introduced. This is primarily because of the merits that the investor enjoys through passive style of funds management. This includes the low cost involved in managing such funds and the significant tax savings. Most of the researchers have compared the performance of the actively managed funds with that of index funds. However the index funds of US and for that reason other parts of the world are different from that of India. Unlike other countries in India the benchmark indices comprise of very less number of securities and thus are unable to represent the entire economy. So in Indian context comparison of performance of actively managed funds with index funds is not logical. Therefore this paper attempts to make an intra-class performance evaluation of some Indian index funds based on some statistics. The study includes the use of graphical interpretations coupled with statistical tools like R-square and tracking error values. Two models of tracking error have been employed to test empirically the performance of the selected index funds. The study is useful for those interested in mutual funds, which includes researchers, academicians, and financial advisors. The paper suits the requirement and the situations prevalent in Indian economy during the period under study.

Suggested Citation

  • Pranav Mishra & Gulab Singh, 2016. "Performance Evaluation of Some Index Funds-Indian Perspective," EuroEconomica, Danubius University of Galati, issue 2(12), pages 101-113, April.
    • Handle: RePEc:dug:journl:y:2016:i:2:p:101-113
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    File URL: http://journals.univ-danubius.ro/index.php/oeconomica/article/view/3199/3224
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    References listed on IDEAS

    as
    1. Keim, Donald B., 1999. "An analysis of mutual fund design: the case of investing in small-cap stocks," Journal of Financial Economics, Elsevier, vol. 51(2), pages 173-194, February.
    2. Edwin J. Elton & Martin J. Gruber & Jeffrey A. Busse, 2004. "Are Investors Rational? Choices among Index Funds," Journal of Finance, American Finance Association, vol. 59(1), pages 261-288, February.
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    Cited by:

    1. Pranav Mishra & Gulab C Singh, 2016. "In Search of a Winning Combination-Evidence from India," EuroEconomica, Danubius University of Galati, issue 1(35), pages 103-110, may.

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