NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Mutual Fund Scheme Performance
Which of the following is the most appropriate benchmark-based comparison when judging a large-cap equity scheme's performance?
A large-cap equity scheme should be compared with the Total Return Index of its stated benchmark. This index includes reinvested dividends and matches the scheme's mandate. Liquid funds, small-cap funds and fixed deposits represent different risk profiles and are not like-for-like comparisons.
- AComparing it with a liquid fund's return
- BComparing it with the Total Return Index of its stated benchmarkCorrect
- CComparing it with a small-cap scheme's return
- DComparing it with the bank fixed deposit rate
Explanation
Performance should be compared with a benchmark that matches the scheme's mandate. SEBI requires benchmarking against the Total Return Index, which includes dividends reinvested, for a like-for-like comparison. The other choices compare different asset classes or mandates.
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