Risk-Return Trade-Off In Blue Chip Mutual Funds: An Evaluation Using Sharpe, Treynor, And Jensen Measures In The Banking Sector

Abstract

This study examines the performance of blue-chip mutual funds within the banking sector, focusing on risk-return trade-offs and performance evaluation using measures such as Sharpe Ratio, Treynor Ratio, and Jensen's Alpha. The analysis spans six years of data, covering key mutual funds, including SBI, Canara, Kotak, and others. Findings reveal fluctuations in annual returns, with positive returns observed in favourable market conditions and negative returns during challenging periods. Volatility varies across funds, highlighting the importance of considering risk in investment decisions. Beta values indicate market sensitivity, while risk-adjusted performance metrics offer insights into the efficacy of fund management strategies. Recommendations are provided for investors, emphasizing diversification, risk-adjusted returns, and informed decision-making. Policymakers are encouraged to prioritize investor protection, transparency, and financial literacy initiatives. Future research directions include exploring long-term performance trends, macroeconomic influences, behavioural finance aspects, and the mutual fund industry technological innovations. Overall, this study contributes to advancing knowledge in finance, investment management, and mutual fund performance evaluation, offering valuable insights for stakeholders navigating the dynamic landscape of financial markets.