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Abstract
The study measures the performance of ethical mutual funds in India. The tools used in the study were Jensen`s Alpha, Sortino, Sharpe`s, Treynor`s Ratio and R-square. The finding of the study shows that the ethical funds are very much inconsistent as the coefficient of variance of the funds is too high. However, the downside risk of all the ethical funds when compared to the index funds is low i.e. there is a less of chance of negative returns when compared to BSE Sensex and Nifty 50. Sharpe and Treynor ratio are also negative which means the funds are not even getting returns higher than the risk-free rate of return (Rf) for the additional risk taken. so, we can conclude that the shariah-compliant funds in India are not able to generate potential returns. This could be, because the ethical funds do not invest in banking sector andthey follow stringent norms. This study also had some limitations such as, the data collected was from the year 2009 to 2019 which has not covered different market cycles in India.