Posted by: Labdhi Mehta on Mar 19, 2018, 06.30 AM IST
1. TRI captures both the price movements and the dividend payouts of its constituent stocks.
2. From 1 February 2018, all mutual fund schemes are mandated by Sebi to use Total Return Index or TRI to benchmark their performance.
3. Investors in equity shares gets returns from two sources: appreciation in traded price of share and dividends received. Fund NAVs factor in the capital appreciation and dividend received from underlying investments.
4. The TRI helps in giving the right picture of the real measures of what the fund has earned over and above—or below— of what was expected.
5. The typical dividend yield on benchmarks is around 1.5% per annum, which means that the fund will have to work harder to beat the extra 150 basis points per annum.
(The content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)