![]() ![]() It helps you to understand what the fund has earned and what it should have earned. The return which you get from Benchmark will give you a quality standard with which you can do the comparison.To understand the importance of Benchmark in mutual funds, we need to compare funds’ performance to benchmark. If the fund manager is regular with the paybacks and performing better compared to the benchmark over a while, the demand for that fund increases However, if the returns are as similar as the benchmark index, then there is a possibility that the investor might have invested in the index while redeeming the fees that are being given to the fund manager. The fund manager should be more vigorous and should have aimed to perform much better than the benchmark index. If a particular mutual fund scheme gives more returns as compared to benchmark index, it is considered that the scheme is performing better.Īccording to the financial experts, if the performance of a mutual fund scheme is equal or less than that of the benchmark index, then the fund manager is under achieving. In mutual funds, benchmarks help the investors to know and understand how effectively their funds are being managed over time. People who invest in mutual funds, depend on the fund manager to confide their money to them. The below table depicts the details of mutual fund schemes with their benchmark: Scheme Name Such Benchmark is considered as the base standard of that mutual fund scheme. Mutual fund houses generally determine the Benchmark for a particular investment. Preferably, the mutual fund’s target should be to match or exceed its benchmark returns. In 2012, SEBI made it mandatory that the fund houses should declare a benchmark index for every scheme. This can be compared against how much the investment has originally earned. Benchmark provides an indicative value of the returns that one’s investment should have earned. ![]() What is a benchmark?Ī benchmark is defined as a standard against which the performance of a mutual fund scheme is measured. In this article, let us understand the concept of benchmark in mutual funds in detail. ![]() But you might not have known what does an ‘mutual fund benchmark’ mean and how does it impact your invested amount. Whenever you invest in mutual funds, you should have come across the term ‘benchmark’. ![]()
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