SEBI Chairman Ajay Tyagi has said that how fund houses outperform the Total Index Return (TRI) benchmark is a true measure of value to their investors. He was speaking at the virtual annual general meeting (AGM) of AMFI today.
TRI includes interest, capital gains, dividends and distributions realized and reinvested over a given period of time. Hence, TRI provides an apt measure to reflect the true alpha created by mutual funds.
Tyagi said, “In terms of scheme performance, SEBI had introduced the concept of benchmarking to Total Return Indices to bring greater transparency in respect of how well various schemes have performed. We look forward to the Industry working hard to outperform relative to these benchmarks to deliver value to its investors.”
This has come after equity funds have delivered an annual return of around 4-6% in the last 5 years as on June 2020. And over the past decade, the annual return of most equity funds is in single digits, shows data available on Value Research.
In comparison, Nifty has delivered a compounded annual return of around 6% over the past 5 years, which means index funds have performed better than actively managed funds.
