Untapped Potential of ELSS Mutual Fund – Risk and Return Analysis

Abstract

Very few investment tools are available in India which has the capability of beating the rate of inflation. As per World Bank data average inflation of India (CPI) in last 20 years is 7.25%. If investors in India are not identifying investment tools which can beat inflation then value of investment will get eroded. In this research paper an attempt is made to evaluate the performance of ELSS mutual funds on the basis of returns compared to benchmark returns. For this purpose, risk adjusted performance measures suggested by R square, Treynor and Sharpe are used. Also standard deviation and beta are calculated for selected scheme to measure risk and volatility. This study observes that, selected ELSS shows double digit return and outperforms the benchmark return under all category. It can be concluded that, ELSS mutual funds have performed better than their respect to volatility. ELSS funds are good options as they provide tax benefits under section 80C and also have capability of beating rate of inflation.