AMFI has released a list of tier-I benchmarks that mutual funds can use for their open-ended debt schemes based on the potential risk class (PRC) matrix.
For funds falling in the least risky cell of the matrix, AMFI has provided two options for each fund category. In case of liquid funds, fund houses can choose between Nifty Liquid - Low Credit Risk Index or CRISIL Liquid Fund Index - Low Credit Risk.
If the liquid fund falls in the 'low interest risk and moderate credit risk' category, fund houses have to choose between Nifty Liquid - Moderate Credit Risk Index and CRISIL Liquid Fund Index - Medium Credit Risk.
For full list of benchmarks, click here.
The release by AMFI comes over a month after SEBI introduced the concept of dual benchmark for mutual funds, wherein fund houses can choose to have two benchmarks — one for comparison and another for style.
Back then, SEBI also asked AMFI to specify the first benchmarks that mutual funds have to use for their debt schemes as per the PRC matrix.
This release from AMFI is as per that directive.
The PRC matrix is also a new concept introduced by SEBI. According to it, debt fund managers have to define the maximum risk they intend to take in each debt scheme. The matrix has 9 cells which represent different levels of interest and credit risk.
For more clarity on PRC matrix, you can refer to our explainer by clicking here.
