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14 Sep 2011 09:55 PM
Rating agency to construct new benchmarks for debt funds 
Ravi Samalad
 

AMFI is in talks with rating agencies to construct new benchmarks to enable fund houses to comply with the new guideline on performance disclosure in advertisements.

Mumbai: To help fund houses to comply with the new guideline on performance disclosure in advertisements of debt funds, AMFI is talking to CRISIL and ICRA for constructing new benchmarks that will be used for measuring the performance of debt funds.

“We are progressing on the implementation. We are in talks with CRISIL and ICRA,” said, H N Sinor, CEO, AMFI.

The recent SEBI circular requires that debt schemes are required to display the returns of 10 year government security and 1 year T-Bill. Fund houses say that the only roadblock is that currently there are no benchmarks which track the 10 year government dated security and 1 year Treasury Bill.

“The only challenge is to show the performance against 1 year T-Bill. There is no index which tracks T-Bill and 10 year government dated security. The 10 year GOI index keeps changing every year. Someone has to create a new index which has the past data,” said a chief operations officer of a leading fund house.

G-Sec Funds are currently benchmarked against I-Sec LiBex.

Liquid funds will have to be benchmarked against 1 year T-Bill. Currently all liquid funds are benchmarked against CRISIL Liquid Fund Index while open-ended debt schemes are benchmarked against CRISIL Short Term Bond Fund Index.

SEBI in its circular issued on August 22 had directed fund houses to show the performance of equity and debt schemes against standard benchmarks like Sensex and Nifty in addition to the scheme benchmarks. Analysts argue that comparing a sector funds performance vis a vis Sensex or Nifty does not make sense.

Further, fund houses have decided to disclose the performance of the second fund manger if a particular scheme is managed by two fund managers.

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