Accurate benchmarking of mutual funds
Sebi's directive to use the total return index (TRI) for benchmarking of mutual fund performance is a welcome move
On 4 January, the market regulator Securities and Exchange Board of India (Sebi) issued a circular on the benchmarking of mutual funds. According to the circular, mutual funds are required to benchmark the performance of a scheme with the total return variant of the chosen index, also known as the total return index (TRI). Currently, most mutual funds use the price return variant of the index, or price return index (PRI) for benchmarking performance.