NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Mutual Fund Scheme Performance
Which statement best describes the purpose of comparing a scheme's return with its Total Return Index (TRI) benchmark?
A Total Return Index includes reinvested dividends or income from its constituents, so it provides a like-for-like comparison with a mutual fund scheme's NAV-based return, which also reflects income earned. A price index would understate the benchmark's return.
- ATRI excludes dividends so that only price movement is compared
- BTRI includes reinvested dividends from the index constituents, giving a like-for-like comparison with a scheme's total returnCorrect
- CTRI is used only for debt funds and not for equity funds
- DTRI reflects the scheme's expense ratio
Explanation
A Total Return Index assumes that dividends or income from index constituents are reinvested, so it is comparable with a scheme's NAV return, which also includes such income. A price index ignores dividends. TRI is used for both equity and debt benchmarks and does not reflect the scheme's expenses.
Did you get it right without looking?
One question tells you little. A timed set on Mutual Fund Scheme Performance shows your real accuracy, how long you take and where you lose marks.
More Mutual Fund Scheme Performance questions
- A scheme returned 14% in a year. Its benchmark index (Total Return Index) returned 11% over the same year. What is the scheme's alpha, measu…
- Which statement about comparing a scheme's performance with its benchmark is correct under SEBI's framework?
- Which statement about comparing a scheme's performance with its benchmark is most appropriate under SEBI's framework?
- The Sharpe ratio of a mutual fund scheme is calculated as:
- A scheme's NAV grew from Rs 25 to Rs 36 over 2 years with no dividends. What is the approximate compounded annual growth rate (CAGR)?
- A scheme's NAV was Rs 20.00 at the start of a period. It paid a dividend of Rs 2.00 per unit during the period, and the NAV at the end was R…