BENCHMARKING THE EFFICIENCY OF 50 LEADING INDIAN EQUITY AND DEBT MUTUAL FUNDS USING DATA ENVELOPMENT ANALYSIS (2021–2024)

Main Article Content

Devyani Chatterji

Abstract

This study examines the efficiency of 50 actively managed equity and debt mutual funds from prominent Indian fund houses including HDFC Asset Management, SBI Mutual Fund, ICICI Prudential Asset Management, Reliance Nippon Life Asset Management, Aditya Birla Sun Life Mutual Fund and Nippon India Mutual Fund using Data Envelopment Analysis (DEA). DEA is a non-parametric method for benchmarking performance considering multiple inputs such as expense ratio, fund size and portfolio turnover alongside outputs like NAV growth, Sharpe ratio and Jensen’s alpha. This comprehensive evaluation captures how effectively a fund converts resources into performance.


The study spans three financial years from 2021 to 2024 capturing a trend in performance over time. The findings reveal that only 25% of the mutual funds in the sample are efficient achieving a DEA score of 1 indicating optimal performance relative to their peers. These efficient funds such as those from HDFC Asset Management and SBI Mutual Fund demonstrate superior resource management by maximizing returns relative to their operational costs. In contrast, the remaining 75% of the funds were identified as inefficient with areas of improvement in expense ratio management and portfolio size optimization.


Factors influencing efficiency include fund size and expense ratio. Larger funds benefit from economies of scale, lowering operational costs, while those with lower expense ratios can allocate more assets to investment, improving overall performance. The study suggests that inefficient funds could enhance their performance by focusing on cost reduction and optimizing their investment strategies.


The paper concludes that DEA serves as a valuable performance evaluation tool in the Indian mutual fund industry. By utilizing DEA, fund managers can identify and address operational inefficiencies, investors are empowered to make more informed decisions, and regulators are provided with a framework to promote greater cost transparency and efficiency within the sector.

Article Details

How to Cite
Devyani Chatterji. (2025). BENCHMARKING THE EFFICIENCY OF 50 LEADING INDIAN EQUITY AND DEBT MUTUAL FUNDS USING DATA ENVELOPMENT ANALYSIS (2021–2024). European Economic Letters (EEL), 15(1), 398–405. https://doi.org/10.52783/eel.v15i1.2411
Section
Articles