Relationship Analysis of Selected Stocks and Funds

Abstract

Over the past ten years, the number of mutual fund (MF) folios in India has increased fourfold due to rising SIP inflows, resulting in a nearly seven-fold growth in MF assets. Bipartite networks in finance, connecting funds and stocks, offer insights crucial for investment strategies. These tools give investors the information they need to evaluate how well their money has been invested or could be invested. Without considering risk-adjusted returns, an investor may unintentionally make a judgment that is obscured because they are unable to understand the big picture of investments. The purpose of this research is to examine the relationship of select Indian equity mutual funds and their portfolio holdings from the period January 2022 to December 2022 in the form of different stocks. Analyzing community detection reveals sectoral clusters, while performance analysis tracks historical trends. The analysis method used the computation of risk adjusted returns through Sharpe, Treynor, Jensen ratios and the creation of a bipartite network for the identification of mutual fund portfolio overlap. Additionally examined is the relationship between stocks because of their inclusion in the same portfolios.