8/10/2023 0 Comments Equity benchmark meaningHowever, the scope of Price Return Index is limited as it only factors capital appreciation for measuring the performance of the mutual fund. Until February 2018, Price Return Index was used as a parameter to measure the performance. Capital appreciation is the increase in the market price of the security. The returns generated for any mutual fund are twofold i.e through the dividend payouts and the capital appreciation of the fund. Difference Between Total Return Index and Price Return When the fund generates higher returns than the benchmark, it is considered to have performed better and vice versa. The performance of the fund is compared to the performance of the benchmark. The price of the benchmark is directly proportional to the prices of the components within and increases with an increase in such prices. These securities are measured at the prevailing market prices and the value of the benchmark is the sum total of all such securities. It is also an index that is a collection of various securities. What is Benchmarking?Ī benchmark is the basis for measuring the performance of a mutual fund. Total Return Index provides a better picture of the returns of the mutual fund as it considers capital appreciation as well as the dividend payouts. This amendment is in effect from 1st February 2018 and has been applicable to all the mutual fund schemes in India. As per SEBI guidelines, Total Return Index is the measure to be used as a basis for benchmarking for all the mutual funds.
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