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Published on 15 July 2025

Daily Information Ratio Disclosure Mandate for Mutual Funds in India

SEBI Requires Mutual Funds to Disclose Information Ratio Daily: What It Means for Investors

Mumbai, January 2025 — In a move aimed at improving transparency and empowering retail investors, the Securities and Exchange Board of India (SEBI) has mandated that all mutual funds must disclose the Information Ratio (IR) of their equity-oriented schemes on a daily basis, starting January 17, 2025.

This regulatory update marks a notable shift in how mutual fund performance will be assessed going forward. The new requirement brings the focus squarely on risk-adjusted returns, encouraging a more nuanced and disciplined approach to evaluating fund managers’ performance.

What Is the Information Ratio, and Why Does It Matter?

The Information Ratio (IR) is a key financial metric used to assess how effectively a fund manager delivers returns compared to the fund’s benchmark, after adjusting for the volatility of those excess returns.

Formula:

IR = (Portfolio Return – Benchmark Return) ÷ Standard Deviation of Excess Returns

In simpler terms:

  • Excess Return is the amount by which the fund beats (or underperforms) its benchmark.
  • Standard Deviation here refers to the consistency—or lack thereof—of that outperformance over time.

Unlike raw returns or simple performance rankings, the IR shines a light on whether the returns were the result of skill or just high-risk bets.

Key Elements of SEBI’s New Mandate

1. Daily Scheme-Level Disclosure

  • All equity-oriented mutual fund schemes must publish their daily Information Ratio on their websites.
  • This disclosure joins existing daily NAV and performance figures, offering a more rounded picture of how a scheme performs.

2. Centralised and Standardised by AMFI

  • The Association of Mutual Funds in India (AMFI) is tasked with ensuring:

    • A uniform reporting format
    • Data availability in downloadable spreadsheets
    • Machine-readable files for third-party tools and analysts

This consistency enables investors to compare funds across AMCs easily, without decoding fragmented reporting styles.

3. How It’s Calculated

  • Benchmark: Each scheme’s Tier 1 benchmark is used.
  • Return Consistency: The daily return is calculated using an arithmetic average, ensuring uniformity across the industry.
  • Volatility Adjustment: The IR uses daily volatility data to gauge the reliability of the fund manager’s alpha.

Why Investors Should Pay Attention

Better Than Just Returns

A fund may outperform its benchmark one month but underperform the next. The IR rewards consistency, not just isolated periods of outperformance.

Clearer Insight into Fund Manager Skill

A high IR means a fund manager is not just beating the market, but doing so in a stable and predictable way.

More Transparency, Less Guesswork

By mandating daily disclosures, SEBI is arming investors with data that can cut through marketing gloss and provide risk-aware insights.

AMFI’s Role in Execution

The Association of Mutual Funds in India is expected to play a crucial role in making this transition smooth and investor-friendly by:

  • Hosting the data in a centralised, easy-to-navigate portal
  • Ensuring cross-AMC comparability
  • Driving awareness campaigns around the importance of risk-adjusted returns and the IR metric

What This Means for Fund Managers and AMCs

For asset managers, this development introduces a new layer of accountability. High IRs will now become a trust signal, and inconsistent schemes may face closer scrutiny.

This change may also:

  • Incentivise more stable portfolio construction
  • Discourage high-risk, short-term bets
  • Promote better-aligned long-term investment strategies

Conclusion

SEBI’s daily disclosure mandate for the Information Ratio is more than a compliance update—it’s a structural shift toward greater transparency, consistency, and risk awareness in India’s mutual fund industry.

For investors, this is a valuable tool to differentiate skill from luck, and to evaluate equity mutual funds not just by returns, but by the quality of those returns.

As financial literacy deepens and data becomes more accessible, such reforms are vital in helping India’s mutual fund ecosystem mature into a truly investor-first marketplace.

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