Mutual funds are the financial institutions which play a crucial role in mobilizing savings and investing them in the capital market. Thus they establish a link between savings and the capital market. They sell units to the public and invest the proceeds in a large number of market securities. They are expected to reduce risk through diversification and provide the ordinary investors with expert selection and professional monitoring of investment backed by excellent customer service. In general, mutual funds turn to be an important investment vehicle of risk-averse investors who want to reap the benefits of buoyant stock markets, but do not have enough time and resources to enter in to the capital market. In this context, this study analyzes the overall performance of mutual funds in India, examines the relative strength of public and private sector mutual funds and determines the factors determining the growth of mutual funds in India. The important findings are the public sector mutual funds performed well till the entry of private sector mutual funds. But after the reforms, the growth of public sector funds has declined sharply.