Right Benchmark

for the Correct Picture

Is your investment a performer or an

under-performer?

Compare its performance with its benchmark

to know the answer…

 

Valid Comparisons

Taking investment decisions is not easy. It involves a lot of comparison, analysis and

interpretation.

When comparing the past performance of two investment products, it is very important

to compare apples with apples and oranges with oranges

For instance, its incorrect to compare the performance of a balanced mutual fund with

an equity diversified fund or a mid cap fund with a large cap fund

Similarly its incorrect to compare the performance of long term investment products such

as life insurance with a small to mid term investment product such as a mutual fund

A valid comparison is one between products with similar features and risk profiles.

Another simpler way of comparing investment avenues is simply comparing

products with their respective benchmarks.

Comparing Benchmarks

What Is A Benchmark?

As per Investopedia, a benchmark is

‘A standard against which the performance of a security, mutual fund or

investment manager can be measured.’

Thus a benchmark can be an index, a combination of an index or even a price

of a commodity in the spot (i.e. cash) market

For instance, indices such as the BSE Sensex, BSE Midcap and CRISIL

Balanced Fund Index or the spot price of gold can be used as effective

benchmarks for an index fund, midcap fund, balanced fund and gold ETF,

respectively

How does Benchmarking help?

Many a times, considering the standalone performance of an investment

avenue may be misleading

For instance, an investment which may have given a 1-year return of 20 per

cent may seem to be a performer

However, that would be true only if its benchmark has delivered a lower

return than that

But, if the return from the benchmark is higher, then, it can be safely

concluded that the performance is not at par

How well is your Investment Performing?

Conclusion

Remember!

Generally, every investment has its own pre-defined benchmark

Investors also can create their own benchmarks for comparison as long as

they have similar features and risk profiles as the investment option

There might be occasions where investment firms use inappropriate

benchmarks for comparison just to highlight their performance

In such a situation, investors can compare them with the correct benchmark

or with the category average

This will help investors to get a clear picture about the investment’s relative

performance with the benchmark

Disclaimer

Insurance is the subject matter of the

solicitation. Please read the sales

brochure carefully before buying the

plan. IndiaFirst Life Insurance Company

Limited. IRDA Registration No. 143.

Registered and Corporate Office

Address: 301, 'B' Wing, The Qube,

Infinity Park, Dindoshi - Film City Road,

Malad (East), Mumbai - 400 097.

www.indiafirstlife.com. SMS <FIRST> to

5667735 SMS Charges apply. Toll free

No - 1800 209 8700.

Thank You