What is the purpose of a benchmark in the context of mutual fund scheme performance?
A
To guarantee a minimum return to investors.
B
To provide a standard against which the scheme's performance can be compared.
C
To determine the Net Asset Value (NAV) of the scheme.
D
To calculate the Total Expense Ratio (TER).
Correct Option:
B
Explanation
A benchmark serves as a reference index against which the performance of a mutual fund scheme is evaluated. It helps investors assess whether the fund manager has outperformed or underperformed the relevant market or investment category.
