Factors Influencing the Performance of Indian Equity Mutual Funds: Evidence from Selected Equity Schemes

Shatakshi Tiwari

tshatakshi25@gmail.com

Dayananda Sagar College of Engineering

Dr. K.G. Hemalatha

hod-mba-vtu@dayanandasagar.edu

Head of Department

Department of Management Studies Dayananda Sagar College of Engineering

Abstract

The Indian mutual fund industry has witnessed remarkable growth over the past decade, driven by increasing financial awareness, technological advancements, regulatory reforms, and rising participation from retail investors. As equity mutual funds continue to serve as a preferred investment avenue for long-term wealth creation, understanding the factors that influence their performance has become increasingly important for investors, fund managers, and policymakers. Although numerous studies have examined mutual fund performance using risk-adjusted measures and benchmark comparisons, limited research has explored the combined impact of multiple fund-specific financial indicators on monthly mutual fund returns within the Indian context.

This study investigates the influence of selected financial variables on the performance of Indian equity mutual funds. Using secondary data collected from selected equity schemes, the research evaluates the relationship between Monthly Return (dependent variable) and four explanatory variables: Net Asset Value (NAV), Assets under Management (AUM), Expense Ratio, and Benchmark Return. Descriptive statistics, Pearson correlation analysis, and Multiple Linear Regression were employed to examine the significance and direction of these relationships.

The empirical findings indicate that Benchmark Return is the most influential determinant of monthly mutual fund performance, exhibiting a strong positive and statistically significant relationship with fund returns. Benchmark Return emerged as the only statistically significant determinant of monthly mutual fund performance, whereas Net Asset Value, Assets under Management, and Expense Ratio did not exhibit statistically significant independent effects within the regression model. The proposed regression model explains a substantial proportion of the variation in mutual fund returns, suggesting that market performance and operational characteristics collectively influence investment outcomes.

The study contributes to the existing literature by providing an integrated empirical framework for analysing mutual fund performance using multiple financial indicators simultaneously. The findings offer practical insights for investors seeking to evaluate equity mutual funds beyond historical returns and provide evidence that can assist asset management companies in improving portfolio management and fund evaluation strategies.

Keywords: Equity Mutual Funds; Mutual Fund Performance; Benchmark Return; Net Asset Value; Assets under Management; Multiple Linear Regression; India.