SEBI vide circular dated December 16, 2022 has issued new directions regarding Performance Benchmarking and Reporting of Performance by Portfolio Managers. An investment approach (‘IA’) is the documented investment philosophy to be adopted by the Portfolio Managers while managing the client funds in order to achieve client’s investment objectives. Now, in addition to IA, an additional layer of broadly defined investment themes called “Strategies” shall be adopted by Portfolio Managers. These broad Strategies shall be ‘Equity’, ‘Debt’, ‘Hybrid’ and ‘Multi Asset’.
Each IA shall be tagged to one and only one Strategy from the Strategies. This tagging shall be at the discretion of the concerned Portfolio Manager. A Portfolio Manager may tag more than one IA to a Strategy, but each IA must be tagged to only one Strategy. The Board of the Portfolio Managers shall be responsible for ensuring appropriate selection of Strategy and benchmark for each IA.
APMI shall prescribe a maximum of three bench marks for each Strategy. These benchmarks shall reflect the core philosophy of the Strategy. While tagging an IA to a particular Strategy, the Portfolio Manager shall select one benchmark from those prescribed for that Strategy to enable the investor to evaluate relative performance of the Portfolio Manager.