Comparte Capital Investment

Analysis of Public & Private Sector Mutual Funds

Mutual funds are the type of company that sponsors the mutual fund.

The types of investments found in public and private mutual funds are remarkably similar.

The mutual fund industry has been extremely popular in the Indian financial market and has played a significant role in channelizing small savings and maximizing returns to investors since its inception in 1963. Mutual funds are suitable for investors who lack large investments or do not have the knowledge or time to study the market but want their wealth to increase. Therefore, this requires an analysis of Public & Private Sector Mutual Funds to judge the fund’s performance. So let’s go a little deep into the matter.

What is Mutual Fund?

According to the Association of Mutual Funds in India (AMFI), “a Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal and invest it in capital market instruments such as shares, debentures and other securities.”

What are Public & Private Sector Mutual Funds?

When classified based on the ownership, mutual funds are the type of company that sponsors the mutual fund. The public sector companies invest in public Sector Mutual Funds, such as SBI Mutual Fund, LIC Mutual Fund, etc. On the other hand, the private sector companies sponsor private Sector Mutual Funds such as ICICI Mutual Fund, HDFC Mutual Fund, Reliance Mutual Fund, etc.

Why is an Analysis of funds required?

Past performance of a mutual fund cannot always guarantee future results. However, if you know how to analyze fund performance, you can make better investment decisions to meet your future expectations avoiding the odds.

How to analyze mutual fund performance?

While analyzing the mutual funds, the following points are essential.

  • Compare fund’s returns to an appropriate benchmark- How well a mutual fund is performing can be identified best if its return is compared to the average return of funds in the same category.
  • Do not always get attracted towards outstanding fund performance – Outstanding performance can sometimes be a negative indicator. It would always be helpful to allow some time to watch the performance trend. Abnormally high returns compared to other funds in the same category may be a sign of danger.
  • Study market and economic cycles- Most common opinion to judge fund performance is keeping an eye on the market and economic cycle. It requires fund managers to take risks to outperform the benchmark.
  • The long-term study of mutual fund performance is vital- Most economic cycles consist of both recession and growth periods, including at least five to seven years’ time frame. Therefore, in an analysis of a mutual fund, if its five-year return ranks higher compared to most funds in its category, you can indeed explore that fund for the future.


Other factors to analyze performance are the manager’s tenure, or you can even use your own evaluation system to measure fund performance.

What inference can we draw from the analysis?

The types of investments found in public and private mutual funds are remarkably similar. For example, both Public and Private mutual funds invest in stocks, bonds, securities, and various other financial assets. Other notable points are as follows.

  1. The difference in the level of risk is found between public and private mutual funds. Public mutual funds usually operate with lower risk levels for steady growth upwards. Whereas private mutual funds, though work in the same way, sometimes take greater risks for greater financial reward in the future. Therefore private sector funds are found riskier compared to public sector funds.
  2. To measure the extent of difference between the mobilization of funds by the public and private sector, the Gap-Index Analysis can be adopted for the period spread over 10-12 years. It is observed that the gap has been widening very fast in the initial period but has shown a decline after that. Both the private and public sector mutual funds may likely come closer to each other in terms of the mobilization of mutual funds.
  3. There is strong evidence of a relationship between the pattern of the gap movement between the mobilization of funds and redemption/repurchase of public and private sector mutual funds.
  4. The redemption in private and public sector mutual funds shows relatively closeness.
  5. With the same risk level, the public sector mutual funds’ performance is at par with private sector mutual funds especially considering return during a given period. However, private sector funds may have better returns than public sector funds during a given period bearing high risks.


A mutual fund is one of the hassle-free investment instruments that suits all. One can easily invest money in public mutual funds with basic knowledge and experience to create wealth over time. In the case of private mutual funds, investors need to consider their risk-taking capacity to earn higher returns. However, as the performance of private and public sector funds may differ assuming other factors, the analysis of these funds may also be challenging. If you want to make a better decision to meet your future expectations, seek an advisor’s expert advice.

That’s why Comparte Investment team asks do you have “Nivesh Ki Aadat”.

With this one can say “Mutual Fund Sahi hai”,  so let me do Nivesh