Measuring mutual fund performance is a tricky affair. There are several models to measure. Among them, asset pricing model is the most appropriate to measure a mutual fund's performance. This article probes into the concerned topic.

The vibrant and growing Indian mutual fund industry today hardly reminds us of its modest beginnings with Unit 64, which was the lone player in the field almost for two and a half decades until public sector banks and other financial institutions started taking interest in it. It was the time when investors were primarily sensitive to the safety of money and thereby public sector institutions were thought to be the only choice for them. The fund houses were primarily being judged by their proximity to the government. Unfortunately, then the debate for real performance was a far cry. It was not surprising that the need for opening this industry was felt quite early in the liberalization era. It was expected that the entry of private players would take the potential of the industry to greater heights.

The expectation was not widely off the mark. Today, mutual fund investors in India receive an unparalleled array and level of services. This has resulted due to the entry of private players. More significantly, with the joining of foreign fund management companies, through the joint venture route, a new dimension in the industry has emerged. These fund houses brought in with them the latest product innovations, investment management techniques and investor servicing technology. The new entrants posed a serious challenge to the then existing public sector fund houses. The competitive environment exposed several structural weaknesses in the then existing regulation and subsequently they were addressed by the regulator. These initiatives were effective to a large extent in streamlining the operations of mutual funds.

Portfolio Organizer Magazine, Mutual Fund Performance Measurement, Asset Pricing Model, Indian Mutual Fund Industry, Public Sector Banks, Mutual Fund Investors, Foreign Fund Management Companies, Product Innovations, Investment Management Techniques, Mutual Funds, Capital Asset Pricing Model, CAPM.