Sebi wants MFs to adopt tougher benchmarks

The Securities and Exchange Board of India (Sebi) is evaluating the category of benchmarks being currently used to compare the returns of mutual fund (MF) schemes. 

The net asset value (NAV) of MF schemes takes into account dividends for computing returns. The schemes are, however, benchmarked against “price return” indices that do not take into consideration the dividend component. 

On an average, the dividend yield for Indian equities works out to 1.25-2 per cent for a year. In other words, dividend yields can add anywhere between 1.25 per cent and two per cent to the returns of MF schemes. 

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