Two debt benchmarks would soon be made available for investors into debt funds. From December, the returns of 10-year government security and 1-year treasury bill would be shown along with debt fund returns in addition to their respective benchmarks.
Market regulator Securities and Exchange Board of India (Sebi) on August 22, 2011 through a circular had asked fund houses to disclose returns of 10-year government securities along with that of long term debt schemes and returns of 1-year treasury bills along with that of short term debt funds. Crisil has already prepared the above benchmarks for the fund houses.
V Ramesh, deputy chief executive of Association of Mutual Funds in India (Amfi) says, ?The benchmark has been prepared and fund houses can use the data while giving out their performance for debt schemes.?
Sebi had also asked fund houses to give point-to-point returns in rupees as well as on a compound annual growth rate (CAGR) basis. Similarly, it had also directed fund houses to show the performance of equity schemes against standard benchmarks like Sensex and Nifty in addition to the scheme benchmarks.
Currently, liquid schemes are benchmarked against Crisil Liquid while short term debt funds are benchmarked against Crisil ST Bond. Some of the Gilt medium and long term funds are benchmarked against I-SEC Li-BEX index of ICICI Securities.
A sales head of the leading fund house on condition of anonymity said, ?It will be positive for the investors, as they can directly compare how their fund have performed against the broader market. This move will give more clarity for the investors, as till now we did not have any proper benchmark to track performance of debt funds.?
In the same circular, regulator had also asked that, whenever performance of a particular scheme is advertised, the advertisement shall also include the performance data of all the other schemes managed by the fund manager of that particular scheme.
In case the number of schemes managed by a fund manager is more than six, then the mutual fund house may disclose the total number of schemes managed by that fund manager along with the performance data of top 3 and bottom 3 schemes managed by that fund manager in all performance related advertisement.