AS Chakravarthy NISM Hyderabad : Scheme Comparison to Benchmark

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Scheme Comparison to Benchmark

SEBI has made it compulsory for mutual funds to compare their schemes against appropriate benchmark indices as part of their half-yearly disclosures.

The concept of benchmark was introduced It is some standard against which the scheme performance can be compared.

A scheme that has performed better than its benchmark is said to have out-performed. Some schemes do under-perform i.e. demonstrate a performance that is weaker than the benchmark.

Some benchmarks that are commonly used in the industry are as follows:

Sl. No.	Benchmark	Relevant for (Type of scheme)	Published by
1	NIFTY-50	Diversified equity	National Stock Exchange
2	S&P BSE Sensex	Diversified equity	Bombay Stock Exchange
3	Mumbai Inter-bank Offered Rate (MIBOR)	Liquid	National Stock Exchange
4	Liquid Fund Index (Liquifex)	Liquid	Crisil.com
5	Composite Bond Fund Index (Compbex)	Income / Debt	Crisil.com
6	Balanced Fund Index (Balance Ex)	Balanced	Crisil.com
7	MIP Index (MIPEX)	MIP	Crisil.com
8	Short Maturity Gilt Index (Si-BEX)	Gilt schemes of short maturity	ICICI Securities
9	Medium Maturity Gilt Index (Mi-BEX)	Gilt schemes of medium maturity	ICICI Securities
10	Long Maturity Gilt Index (Li-BEX)	Gilt schemes of long maturity	ICICI Securities
11	Composite Gilt Index	Composite gilt schemes	ICICI Securities

The new cadre of distributors is permitted to sell only ‘performing schemes’. SEBI has defined ‘performing schemes’ as those that have performed better than the benchmark in each of the previous three financial years.

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