A Study of Index Mutual Fund and Investment Portfolio for Smart Investment in India

Abstract To help with wise investing, this research compares the performance of balanced mutual fund schemes and index mutual fund schemes in India. The study evaluates the returns from funds, checks performance after risk is taken into account, and improves portfolio structure using information from 2017 to 2024 that includes traditional metrics as well as recent approaches such as Markowitz's theory and the CAPM. The research looks at ESG funds, regular index funds, and balanced advantage programs. Regression analysis using CAPM shows that UTI and HDFC have nearly perfect beta values and little alpha when measured against the benchmark Nifty 50, proving they are passive funds. ESG funds perform a bit better than conventional funds by showing better risk-return efficiency. The high Jensen’s Alpha values of balanced mutual funds from ICICI and HDFC indicate that these schemes are handled well by active managers. Alpha is not present in index funds, the study believes, because the hypothesis testing did not find any significant difference between fund returns and the benchmark. Furthermore, getting the best risk-return balance means including UTI, HDFC, and SBI Next 50 in your portfolio using the optimization approach. Anyone seeking to build a diversified portfolio could use this strategy’s practical advice. At the end of the paper, the authors propose to increase ESG fund usage, educate investors better, and focus on additional research into ESG fund impacts. People interested in making Indian mutual fund strategies more international in nature should be aware of the findings.