Sebi wants MF schemes to give true picture of returns

Regulator seeks schemes to be benchmarked to total return index in place of price-return index

The Securities and Exchange Board of India (Sebi) wants the mutual fund (MF) industry to benchmark the returns of its equity schemes against a total return index, a move that would diminish the alpha generated by such schemes and help investors assess the returns better.

“The regulator believes that the new benchmarking methodology would bring in greater transparency and wants the industry to move in that direction,” said a senior MF official, with direct knowledge of the discussions between the markets regulator and MF chiefs that took place last week.

At present, the net asset value (NAV) of MF schemes