Move to provide better disclosure to investors
Mumbai, August 23, 2017: DSP BlackRock Investment Managers Pvt. Ltd., one of India’s premier asset management companies, today announced that it would be disclosing performance of its active equity mutual funds with the Total Return Index (TRI) as a benchmark.
With very few exceptions, the mutual fund industry generally showcases its performance against a benchmark. However, while the performance of the mutual fund scheme is a function of dividend as well as the capital gains made on investments, the returns on the benchmarks are considered without any dividend income.
Total return, when measuring performance, reflects the actual rate of return of an investment or a pool of investments over a given evaluation period. Total return includes interest, capital gains, dividends and distributions realized over a given period of time. Hence, total return is viewed as a strong measure of an investment’s overall performance and an apt measure to reflect the true alpha created by mutual funds.
Kalpen Parekh, President, DSP BlackRock Investment Managers Pvt. Ltd said “Our move to disclose returns against TRI will help in giving the right picture of the real alpha generated by active fund management. The alpha that is shown currently may look overstated as dividends are not added in benchmark returns. At a time like this, when we are seeing very high flows, we want our investors to have a true picture of the alpha generated and also to have the right expectations from their investments. We feel benchmarking to TRI is a step towards responsible and transparent communication with our advisors and investors and also sets high standards in investment management.”
Anup Maheshwari, EVP and CIO – Equities, DSP BlackRock Investment Managers Pvt. Ltd said, “Total return determines an investment’s true growth over time. It is important to evaluate any fund’s performance against its total return benchmark to get the right perspective on the fund’s relative performance.”