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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Mutual Fund Scheme Performance

In the context of evaluating a mutual fund scheme, which benchmark choice is most appropriate for a large-cap equity scheme?

A large-cap equity scheme should be compared with a large-cap equity index such as the Nifty 100 Total Return Index. A benchmark must reflect the scheme's investment universe and style; overnight, gold or small-cap indices do not, so they give misleading comparisons.

  1. AAn index of large-cap stocks such as the Nifty 100 TRICorrect
  2. BA broad overnight rate index
  3. CA gold price index
  4. DA small-cap stock index

Explanation

A benchmark should match the scheme's investment universe and style, so a large-cap equity scheme should be compared with a large-cap equity index, ideally on a total return basis. Overnight, gold and small-cap indices do not represent its portfolio, making comparison misleading.

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