This research examines the effectiveness of mutual fund (MF) operations in Nepal’s financial market, specifically analysing how these investment vehicles aggregate capital from varied investor portfolios to optimise smaller fund management strategies. The investigation spans a 4-year period, examining five distinct funds through comprehensive performance measurement techniques. The analysis incorporates multiple evaluation criteria, including market performance benchmarks, Treynor’s risk-adjusted ratio, Sharpe’s reward-to-volatility measure and Jensen’s alpha coefficient to assess fund efficiency. The findings reveal that fund operational expenses and maturity period (fund age) emerge as the primary determinants influencing performance outcomes, demonstrating statistically significant associations (p < .05). Conversely, total asset size and fund liquidity demonstrate negligible influence on performance metrics. The evaluation demonstrates that each examined fund successfully exceeds market benchmark performance, with Sanima Equity Fund (SAEF) achieving superior results across measured parameters, whereas Laxmi Equity Fund (LEMF) demonstrates comparatively weaker performance indicators. This investigation provides significant contributions to investment decision-making by revealing the operational characteristics and performance patterns within Nepal’s MF sector.

Market return, mutual funds, performance evaluation, Sharpe ratio, stock market,

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