Risk-Adjusted Performance Evaluation of HDFC Equity Fund: A Study of Returns Relative to Risk

Risk-Adjusted Performance Evaluation of HDFC Equity Fund: A Study of Returns Relative to Risk

P.Samatha[1]

Dr.G.Bhavani Prasad[2]

Abstract

This paper evaluates the risk-adjusted performance of the HDFC Equity Fund, a prominent large-cap equity fund in India, over the period from January 2018 to December 2023. The study utilizes key performance metrics, including the Sharpe ratio, Treynor ratio, and Jensen's alpha, to assess how well the fund has performed relative to the risks taken. The analysis reveals that the HDFC Equity Fund has outperformed its benchmark, the Nifty 50 Index, in terms of risk-adjusted returns. With a Sharpe ratio of 0.85, a Treynor ratio of 0.12, and a positive Jensen's alpha of 3.5%, the fund has effectively managed risk while generating superior returns. These findings provide valuable insights for investors looking to assess mutual funds based on their risk-return trade-off, particularly for those seeking equity funds with robust long-term performance. The paper concludes by recommending the HDFC Equity Fund for investors with a moderate to high risk tolerance, looking for long-term capital growth. Keywords: HDFC Equity Fund, Risk-Adjusted Performance, Sharpe Ratio, Treynor Ratio, Jensen's Alpha, Nifty 50 Index, Mutual Fund Performance, India.

Keywords: HDFC Equity Fund, Risk-Adjusted Performance, Sharpe Ratio, Treynor Ratio, Jensen's Alpha, Nifty 50 Index, Mutual Fund Performance, India.

[1] Research Scholar, College of Commerce and Business Management, Kakatiya University, Warangal.
[2] Professor(Rtd), College of Commerce and Business Management, Kakatiya University, Warangal.