CRISIL Limited has launched 28 new indices that can be adopted as Tier I benchmarks by mutual funds for their open-ended debt schemes, specific to their potential risk class (PRC) classification.

The PRC matrix for debt schemes, notified by the Securities and Exchange Board of India in June last year, frames the maximum interest rate and credit risk a fund manager can take in a scheme, which helps investors arrive at informed decisions.

The new CRISIL indices have been constructed using data for ~20 years, and in a way that they bake in constraints specified for each debt mutual fund category and also those specific to the PRC. These would be available to users starting today.

Says Bhushan Kedar, Director, CRISIL Fixed Income Research, “The criteria of these indices are created such that they follow a predictable band in terms of duration and credit profile suitable to each debt mutual fund category and PRC bucket combination. What that means is the risk profiles and constraints of indices and mutual funds will now be closely aligned, which creates the ground for far better benchmarking of performance.”

CRISIL currently maintains 105 standard and over 100 customised indices, which are used by mutual funds, insurance companies, provident funds, and investors in India.

Says Jiju Vidyadharan, Senior Director, CRISIL Research, “While mutual funds will be adopting the Tier I indices we just launched, it is pertinent to note that CRISIL has also been supporting the industry by creating bespoke Tier II benchmarks. These could be specific to a scheme’s investment style — in addition to meeting different credit and duration strategies stipulated by the PRC buckets — and enhance benchmarking practices. The PRC indices underscore CRISIL’s sharp focus on creating relevant and differentiated products for the evolving Indian debt market.”

For detailed methodologies of these indices, please refer to the CRISIL Indices webpage https://www.crisil.com/content/dam/crisil/indices/target-date-and-custom-indices/crisil-prc-indices.pdf