AUM for Benchmarking

AUM sounds like a simple number. But a fund's size can be measured several ways. It could be what investors have promised, what has actually been called and invested, or what the portfolio is worth today.

SEBI needed one fixed answer for AIF performance benchmarking and reporting to Benchmarking Agencies. So it picked a single rule: AUM for benchmarking is the total capital drawn down under the scheme.

This benchmarking framework requires any association of AIFs representing at least 33% of the number of AIFs by membership to notify one or more Benchmarking Agencies, which enter into agreements with individual AIFs to collect and compile performance data. AIFs whose schemes have completed at least one year from First Close must report the necessary information, including scheme-wise valuation and cash flow data, to these agencies.

The operational guidelines fix the reporting cadence and basis precisely: benchmarking is done half-yearly, based on data as of 30 September and 31 March each year; data for 31 March must be audited, while data for 30 September may be unaudited; and performance reporting and benchmarking are carried out on the scheme's pre-tax NAV. Benchmarking Agencies then compile comparable industry benchmarks separately for Category I, II and III AIFs, for each year since 2012, and disseminate them publicly, alongside individual Performance Benchmark Reports for each AIF or scheme.

Meridian Growth Fund II, a Category II AIF, has a total capital commitment (corpus) of Rs 300 crore, of which Rs 180 crore has actually been drawn down and invested as of 31 March. The fund's portfolio, after one year of value appreciation, is currently worth Rs 205 crore.

For performance benchmarking purposes, Meridian's reportable AUM is Rs 180 crore — the capital drawn down — not the Rs 300 crore corpus, and not the Rs 205 crore current market value of the portfolio. This Rs 180 crore figure, along with the fund's pre-tax NAV and cash flow data, is submitted to the Benchmarking Agency as of 31 March, using audited figures.

Six months later, at 30 September, Meridian reports again — this time the fund has drawn down a further Rs 40 crore, taking AUM for benchmarking to Rs 220 crore, and because it is the September cut-off, the data may be submitted unaudited. The Benchmarking Agency uses both submissions to place Meridian within the Category II AIF industry benchmark for the relevant vintage.

Chapter 8 (Fund Due Diligence — Investor Perspective), section 8.6 (Fund Benchmarking), sets out the entire benchmarking framework, including Box 8.2's operational guidelines — the source of the "AUM = total capital drawn down" definition, the half-yearly cycle, and the audited/unaudited data distinction. Expect this specific AUM definition tested directly against the more general, intuitive notions of "fund size" (corpus or current market value), since the whole point of the definition is to fix that ambiguity.

• AUM for benchmarking is drawn-down capital, not corpus and not current market value. All three numbers exist for the same fund at the same time and are frequently swapped in exam distractors.
• 31 March data must be audited; 30 September data may be unaudited — do not assume both benchmarking submissions in a year carry the same assurance level.
• The 33% membership threshold governs which AIF association may notify a Benchmarking Agency — it is not a threshold on the AIFs being benchmarked themselves.
• Benchmarking runs on pre-tax NAV, and separately from the fund's own investor-facing reporting, which may use different bases — do not conflate the two reporting streams.