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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 most appropriate under SEBI's framework?

A scheme's performance should be compared with a benchmark that matches its investment mandate. SEBI requires benchmarks consistent with the scheme's objective and asset allocation, so that the comparison is like-for-like rather than against an arbitrary index.

  1. AEquity schemes must be compared with a benchmark that matches the scheme's investment mandateCorrect
  2. BAny broad market index may be used regardless of the scheme's mandate
  3. CBenchmarks are chosen by the distributor for each investor
  4. DPerformance is compared only with the returns of other AMCs' schemes

Explanation

SEBI requires each scheme to be benchmarked to an index consistent with its investment objective and asset allocation, so comparisons are meaningful. Free choice of any index or distributor selection would defeat this purpose.

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