Identify the true statement(s) with respect to the benchmark for sector funds. A) It is ideal to benchmark a sector fund against an index representing the respective sector. B) It is advisable to benchmark a sector fund against a diversified fund to get the correct picture.
A
Only A is Correct
B
Only B is Correct
C
Both A & B are Correct
D
Both A & B are Incorrect
Correct Option:
A
Explanation
A sector fund should be benchmarked against an index representing the same sector, such as the Nifty IT Index for an IT fund or the Nifty Pharma Index for a pharma fund. Benchmarking against a diversified fund is not appropriate.
