NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Mutual Fund Scheme Performance
Which statement about comparing a scheme's performance with its benchmark is correct under SEBI's framework?
The benchmark should reflect the scheme's investment style or objective, and its performance is shown against it. An arbitrary or later-chosen index would make the comparison meaningless for investors.
- AA scheme may choose any index it likes, regardless of its investment objective
- BThe benchmark should reflect the investment style or objective of the scheme, and performance is shown against itCorrect
- CBenchmark comparison is required only for debt schemes
- DBenchmark is chosen only after the NFO closes, based on returns achieved
Explanation
A benchmark is chosen to reflect the scheme's stated investment objective and style, so that comparison is meaningful. It is not arbitrary and applies to equity and debt schemes alike. It is also not picked after the fact on returns.
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