Sebi mandates mutual funds to disclose IR for risk-adjusted returns of schemes
risk adjusted return of mutual fund schemes, on its website on a daily basis.
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“Considering the significance of volatility of performance in determining the suitability of MF schemes, Information Ratio (IR) is an established financial ratio to measure the RAR of any scheme portfolio. It 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,” said Sebi.
Earlier the market regulator mandated filing of periodic information regarding schemes performance by AMCs. Apart from this, the appropriate disclosures pertaining to scheme returns were also made voluntarily in various documents or disclosures by AMCs.
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Commenting on the disclosure of information ratio, Sebi mentioned that AMFI shall ensure that such disclosure shall be available on its website in a comparable, downloadable (spreadsheet) and machine readable format and IR disclosure shall be applicable only for equity oriented schemes.
The circular mentioned the methodology for calculation of IR for each category of mutual fund
