MUMBAI: SEBI has asked asset management companies (AMCs) to disclose their information ratio, which is used to measure risk-adjusted returns of mutual fund schemes, on their websites on a daily basis for equity-oriented schemes.
In a master circular issued on Friday, the regulator said, “considering the significance of volatility of performance in determining the suitability of MF schemes, the information ratio (IR) is an established financial ratio to measure the risk adjusted return (RAR) of any scheme portfolio.
The RAR is often used as a measure of a portfolio manager’s level of skill and ability to generate excess returns, relative to a benchmark and also attempts to identify the consistency of the performance by incorporating standard deviation/risk factor into the calculation, Sebi said, adding given its importance, AMCS are hereby asked to report the IRs on a daily basis.
Earlier, the regulator had mandated filing of periodic information regarding scheme performance by AMCs. The circular mentions the methodology for IR calculation for each category of schemes.