What is a Benchmark Index in Mutual Funds?
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Every mutual fund is measured against a benchmark index like Nifty 50 or Nifty 500 TRI. Learn what a benchmark is and how to use it to judge fund performance.
A benchmark index is the yardstick a mutual fund measures itself against — usually a well-known market index like Nifty 50, Nifty 500 TRI, or a sector-specific index. Every fund's factsheet discloses its benchmark, and performance is always meant to be judged relative to it, not in isolation.
Why "12% Return" Alone Means Nothing
A fund that returned 12% last year sounds good — until you learn its benchmark returned 18%. That fund actually underperformed by 6 percentage points. Always compare a fund's return to its own benchmark's return over the same period, not to some other fund's benchmark.
Common Benchmarks by Category
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| Fund Category | Typical Benchmark |
|---|---|
| Large Cap | Nifty 100 TRI / BSE 100 TRI |
| Flexi Cap | Nifty 500 TRI |
| Mid Cap | Nifty Midcap 150 TRI |
| Small Cap | Nifty Smallcap 250 TRI |
| ELSS | Nifty 500 TRI |
TRI (Total Return Index) includes dividends reinvested, giving a fairer comparison than the plain price index — always check a fund is benchmarked against the TRI version, not the older price-only index.
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