Performance Benchmarking

Almost every fund pitch claims top-quartile performance. Before 2020 nobody could check.

AIFs are not listed. There is no daily price and no index to compare them with. The workbook says this plainly: the absence of a proper benchmarking system was one of the real problems for anyone trying to rank AIFs, and it was worst for new funds and for funds with unusual themes.

So SEBI made benchmarking compulsory. Funds send their cash flows and their valuations to an approved agency. The agency pools everybody's data and publishes industry benchmarks. It also sends each fund a report showing that fund against those benchmarks.

The teeth are in the last step. If a fund puts its past performance in its offer document or in any marketing material, it must put the benchmark report next to it. The claim and the check now travel together.

SEBI built the regime in two circulars, both of 2020 — 6 February 2020 and 12 June 2020 — and Chapter 8 reproduces the operational guidelines as Box 8.2.

Who runs it. Any association of AIFs whose membership represents at least 33% of the number of AIFs may notify one or more Benchmarking Agencies, each of which signs an agreement with the AIFs covering what data is reported, how, and on what confidentiality terms. In practice IVCA has appointed three agencies — CRISIL, NSE and Preqin — and they publish benchmarks for all AIF categories in both INR and USD.

Who has to report. Every AIF, for all schemes that have completed at least one year from the date of first close. A scheme younger than that is outside the regime.

The mechanics in Box 8.2, Section A.

Valuation must follow the scheme's PPM, the reporting format must name the valuation agency and state the valuation principles, and any change of valuation principle must be told to the agency in the immediate next data submission.

What comes back. Each agency gives the scheme a Performance Benchmark Report against the industry benchmarks, with the basis of calculation disclosed. Section B allows a fund to commission a customised Performance Report as well — a fee-based service needing the express consent of every AIF whose data is used.

Where the disclosure bites. Past performance in the PPM, in any marketing or promotional material, or in any reporting to existing investors must be accompanied by the benchmark report for that scheme. For Category I and II AIFs the agencies benchmark by vintage year, using pooled IRR, investment multiples and the ratios DPI, RVPI and TVPI.

One number XIX-A does not give. Later circulars of 21 June 2023 and 19 September 2024 require the manager to report portfolio valuations to the agencies timely — and that is the only word this workbook uses. A labelled divergence: the published Benchmarking Agency page, written from the Series XIX-B workbook, puts that deadline at 6 months from 31 March; the published Performance Report page, written from Series XIX-E, puts it at 7 months. XIX-A gives no month count at all. Answer from the paper you are sitting, and do not carry a month figure into a XIX-A answer.

Narmada India Growth Fund — Scheme I is a Category II AIF. Illustrative figures. It declares first close on 10 January 2025.

When does it start reporting?

What AUM figure goes in? As on 31 March 2026 the scheme has:

Capital commitments received      Rs 500 crore
Capital actually drawn down       Rs 180 crore
Market value of the portfolio     Rs 240 crore

AUM for benchmarking              Rs 180 crore   <- total capital drawn down

Not Rs 500 crore and not Rs 240 crore. The performance itself is reported on pre-tax NAV, in both rupees and dollars.

Which benchmark? Category II, vintage year 2025 — the year of first close — so Narmada is compared with other Category II schemes that held their first close in the same year, on pooled IRR and on TVPI, DPI and RVPI.

And the consequence. In April 2026 the manager prepares a pitch deck quoting Scheme I's 1.4x TVPI. Because that is marketing material carrying past performance, the CRISIL benchmark report for Scheme I must go out with it. The report puts the 2025-vintage Category II pooled TVPI at 1.55x, so the deck now shows the fund is behind its vintage, not ahead of it. That is exactly the outcome the rule exists to force.

Chapter 8 (Fund Due Diligence — Investor Perspective), section 8.6 on Fund Benchmarking, with SEBI's operational guidelines set out in full as Box 8.2. Chapter 8 also lists past performance review with a peer comparison and benchmarking to listed markets as one of the four legs of its fund selection approach.

This is a figures section and it is examined as one. Learn the 33% association threshold, the one year from first close entry test, the 30 September and 31 March half-yearly dates, which of the two is audited, that AUM means capital drawn down, that NAV is pre-tax, that benchmarks run from 2012 and are built per category, that reporting is in both INR and USD, and the three IVCA-appointed agencies. The most common question style asks which AUM figure is used, because three plausible figures exist and only the drawn-down one is right.

• AUM for benchmarking is capital DRAWN DOWN. Not commitments, not corpus, not portfolio market value. This has its own page at AUM for Benchmarking because it is the single most-missed line in Box 8.2.
• One year from FIRST CLOSE, not from registration and not from final close.
• March audited, September unaudited. Reversing the two is the obvious trap, and the dates themselves are fixed — 30 September and 31 March, not the fund's own year end.
• Pre-tax NAV. A post-tax figure is the wrong basis.
• Benchmark Report versus Performance Report. The SEBI-mandated standard report is the Benchmark Report. The customised, fund-commissioned, fee-based one is the Performance Report, and it needs the express consent of every AIF whose data feeds it.
• 33% is a membership share of the number of AIFs, and it qualifies the association to notify agencies. It is not a share of industry AUM and not a quorum.
• The valuation-reporting deadline differs between the AIF papers. XIX-A says only that the manager must report timely. Series XIX-B's workbook says 6 months; Series XIX-E's says 7 months. Never carry one paper's month count into another's answer.
• SEBI mandated the benchmarking; IVCA appointed the agencies. CRISIL, NSE and Preqin are not SEBI appointees.