A comparative study on the performance of index funds

An Index Fund is a passively managed scheme investing mainly in equity shares of only those companies comprised in indices like the S&P CNX Nifty that may be defined from time to time. Investors need to know how risky index schemes are and what would be its contribution to the total risk of a portfolio. Before investing investors would also want to know which funds gives more return, which fund is performing well, which fund is more risky etc. This study analyses the performance of the selected index funds by comparing it with the benchmark S&P CNX Nifty. The present study does these using certain key statistics. With the help of these key statistics an investor can analyze different Index Funds and put his/her money in a fund which suits his/her risk perception. A sample of 10 Index Funds have been taken for the analysis. For the analysis of risk of these funds Standard deviation and Beta is used. For the performance on Risk-Return - Sharpe ratio has been used along with ratios such as Treynor ratio and Jensen Alpha. Also, the sample funds are compared with a benchmark Nifty to find out how well they are performing with respect to the market. Based on the quantitative study conducted between the schemes and the S&P CNX Nifty for the study period i.e. 2005 to 2011 it is found that there is no significant difference of volatility between the two.