Beyond The Benchmark: Risk-Return Optimization Of Indian Bond Etfs (2020–2025)-An Empirical Study

Abstract

This study examines the performance and risk-return optimization of selected Indian Bond Exchange Traded Funds (ETFs) over the period 2020–2025, with a focus on constructing an efficient portfolio using Modern Portfolio Theory (MPT). Annual Absolute Returns, Average Daily Returns, Standard Deviation, Beta, and Annualised Sharpe Ratios were computed to assess both absolute and risk-adjusted performance. The analysis also compared ETF performance against the Nifty 10-year Government Securities benchmark to evaluate relative efficiency. Results indicate that BARODA BNP, TATA GILT, and ICICI PRUDENTIAL GILT consistently outperformed the benchmark in risk-adjusted terms, while 360 One exhibited exceptionally high returns accompanied by substantial volatility. The efficient frontier confirmed the portfolio’s optimal positioning for conservative investors seeking stability with moderate returns. These findings underscore the potential of strategically selected bond ETFs in enhancing portfolio efficiency in the Indian debt market.