A Comparative Analysis of Risk and Return of Large Cap Equity Mutual Fund Schemes in India

Abstract

Investment in mutual fund has gained substantial attention of small investors in India during past few years. Especially after Covid phase there is numerous increases in mutual fund investment. Investment in mutual fund is subject to market risk and it is very important for the investors to understand and measure risk for making informed investment decisions. Risk in mutual fund investment analysed with the help of various measures. Value at Risk is a simple approach to measure the possible expected loss. VaR determine downside risk at given period of time for associated probability applicable. The present study employs Value at Risk (VaR) approach to determine potential downside risk of large cap equity mutual fund schemes in India. Our study on Value at Risk provide a deep insight on downside risk associated with large cap mutual funds in pre and post Covid period. In this paper, we have determined Value at Risk by following Historical Approach (Non-parametric) and Variance-Covariance Approach (Parametric) to understand risk associated with large cap mutual funds. This study analysed and compared pre and post covid risk and return of seventeen large cap mutual fund schemes in India. The study concluded that large cap mutual fund has given higher return during post covid period as compare to return during pre-covid period. Correspondingly potential downside risk in large cap mutual fund schemes has also increased during post covid period.