Nearly 56 per cent of open-ended equity funds have selected good benchmarks, while remaining 44 per cent have a weak selection in this regard, according to a study by Crisil FundServices (Crisil).
The study of benchmark practices is based on the alignment of investment objectives and the degree of dispersion in statistical measures with reference to the benchmarks.
The Securities and Exchange Board of India (Sebi) has made it compulsory from April 2002 for mutual funds to compare the performance of portfolios with suitable benchmarks. Benchmarks are considered an important tool to measure portfolio performance. They help create greater investor awareness and, thereby, facilitate investment decisions.
According to Krishnan Sitaraman, director, Crisil, “Selected properly, benchmarks provide investors a perspective on the expected risk-adjusted performance of fund portfolios and help them make investment decisions as per their risk appetite.”
