Amfi lists top-tier standards for mutual fund plans

The Association of Mutual Funds of India (AMFI) has published a list of indicators that it intends to be used by AMCs as first-class benchmarks.

A circular issued by the Securities and Exchange Board of India (SEBI) in October last year asked the industry to achieve standardization in the standards of Mutual Fund (MF) schemes. The regulator had mandated a two-tiered structure for measuring schemes for certain classes of schemes. The first level criterion will reflect the program category, and the second level criterion will be a guide to the investment style and strategy of the fund manager within this category. All criteria followed should be indicators of total return.



Amfi has included Level 1 standards for 67 types of schemes. For example, a large-cap fund will have Nifty 100 as a Tier 1 benchmark, while a mid-cap fund will have Nifty Midcap 150 as a benchmark.

“Having a common class criterion is useful for investors to make a comparison of the relative performance of funds within a class with a single criterion that is typical of the broader investing world for that class. In addition, many other ratios used by investors such as the information ratio and capture ratios will be calculated using a common class criterion, said Kaustubh Belapurkar, Director – Research Director, Morningstar India.

He added that funds can also measure themselves on a secondary metric that represents their investment style. “This will help investors identify the specific style of the fund and compare the fund’s performance against this indicator as well,” he said.


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