For its first year, an AIF scheme's performance is largely a conversation between the manager and its investors. After that, the regulatory framework puts the numbers into an industry-wide comparison. Once a scheme completes one year from its first close, the manager must send scheme-level valuation and cash flow data to the notified benchmarking agencies twice a year, and any past performance it shows to prospective investors must be accompanied by a performance-versus-benchmark report. This article explains when the obligation starts, what is reported, the timelines, and how to avoid errors that can undermine a fund's track record.
Under SEBI's AIF framework, every scheme that has completed at least one year from its first close must report scheme-wise valuation and cash flow data to the benchmarking agencies on a half-yearly basis, as at 30 September and 31 March. March data must be audited. If past performance is shown in a PPM or marketing material, a performance-versus-benchmark report from the agencies must accompany it.
Why SEBI introduced performance benchmarking for AIFs
Before 2020, AIF investors had no consistent way to compare one manager's claimed returns with the rest of the market. Each manager chose its own metrics, periods and peer groups. SEBI's circular of February 2020 on disclosure standards for AIFs addressed this by introducing industry-level performance benchmarking, operated by benchmarking agencies notified through the industry associations.
The requirements now sit in the SEBI Master Circular for AIFs dated 3 June 2026, which consolidates the 2020 framework and later amendments. The policy objective is straightforward: an investor should be able to judge a manager's performance against comparable funds, using data computed on a common basis rather than selected by the manager.
When does the benchmarking obligation start?
The trigger is the completion of one year from the date of first close of the scheme. It is not the final close and not the date of registration. A scheme that achieves first close in October 2025 enters the benchmarking cycle once October 2026 has passed, and its first reporting date is the next half-year end.
A Category II scheme declares first close on 15 August 2025 and final close on 31 July 2026. It completes one year from first close on 15 August 2026. Its first benchmarking data point is therefore as at 30 September 2026, even though fund-raising closed only two months earlier. A manager who assumes the clock runs from final close would miss the first submission.
This is one more reason why the first close date matters so much in an AIF's life. Our note on the 12-month first close deadline covers how first close is defined and reported.
What data must be reported to the benchmarking agencies?
Managers report scheme-wise data in the formats specified by the benchmarking agencies. The core elements are:
The agencies use this data to publish industry benchmarks by category and vintage, and to produce scheme-level performance-versus-benchmark reports that managers can use in disclosures.
Benchmarking periods and timelines
Benchmarking runs on a half-yearly cycle:
| Data as at | Audit status | Reporting timeline |
|---|---|---|
| 30 September | May be unaudited | Within 45 days of the half-year end |
| 31 March | Must be audited | Valuations based on audited investee data within seven months of the financial year end |
The original version of this note referred to six months for March data. SEBI's circular of 19 September 2024 on valuation of AIF portfolios extended the window for reporting valuations based on audited data of investee companies to the benchmarking agencies from six months to seven months. Valuations based on audited investee data can be reported only after the AIF's own books for the year are audited.
The longer window recognises a practical problem: many unlisted investee companies finalise their audited accounts late, and the AIF's year-end valuation depends on them. It does not reduce the need for accurate, reconciled cash flow data, which is entirely within the manager's control.
How benchmarking affects PPM and marketing disclosures
The most commercially significant consequence is in fund-raising. If a manager refers to the past performance of an AIF or scheme in its private placement memorandum or in any marketing or promotional material, it must also provide the performance-versus-benchmark report for that AIF or scheme, as produced by the benchmarking agencies.
This closes a loophole. A manager can no longer present a headline IRR without showing how it compares with peers of the same category and vintage. For a manager raising a second or third fund, the benchmark report effectively becomes part of the pitch.
- Check every pitch deck, factsheet and PPM for performance figures before circulation.
- Use the latest available benchmark report and state the reporting date.
- Make sure figures quoted in the deck match those submitted to the agency.
- Update the PPM disclosures through the proper process; see our note on intimating PPM changes to SEBI.
Common mistakes in benchmarking submissions
- Starting the clock at final close. The trigger is one year from first close.
- Unreconciled cash flows. Drawdown and distribution dates in the submission differ from the bank and unit register, which distorts IRR.
- Inconsistent valuations. Values reported to the agency differ from those in investor statements or audited accounts without explanation.
- Missing late-closing investors. Equalisation and catch-up flows for investors admitted after first close are omitted or misdated.
- Selective disclosure. Past performance appears in a deck without the benchmark report.
- Ignoring wind-down effects. Under the dissolution framework in the 2026 Master Circular, unliquidated investments can be marked at a nominal value where the prescribed bid process is not completed, which then flows into the track record.
Building a benchmarking-ready data process
- Diarise the trigger date. Record first close and the one-year anniversary for every scheme in the compliance calendar.
- Maintain a dated cash flow ledger. Keep investor-level drawdowns, distributions and fees with value dates, reconciled to bank statements.
- Align valuation cycles. Plan the year-end valuation so audited investee data and the AIF's own audit can be completed within seven months.
- Reconcile before submission. Tie the submission to investor reports, the Annual Activity Report and audited accounts.
- Control marketing use. Require compliance sign-off for any document quoting performance, with the benchmark report attached.
- Keep evidence. Retain submissions, acknowledgements and agency queries for the PPM audit and Compliance Test Report.
Benchmarking data also feeds the reporting described in our guide to AIF quarterly and annual activity reports, so a single reconciled dataset serves several obligations.
Frequently asked questions
When does an AIF scheme have to start reporting to benchmarking agencies?
Once the scheme has completed at least one year from the date of its first close. Reporting is then done for each half-year ending 30 September and 31 March.
Does March benchmarking data have to be audited?
Yes. Data as at 31 March must be audited, while 30 September data may be unaudited. Valuations based on audited investee data can be reported within seven months of the year end.
Can an AIF show its past performance in a PPM?
Yes, but whenever past performance is mentioned in the PPM or any marketing material, the performance-versus-benchmark report provided by the benchmarking agencies must also be provided.
Is the deadline for March data still six months?
SEBI's September 2024 valuation circular extended the window for reporting valuations based on audited investee company data from six months to seven months.
Do angel funds have to report benchmarking data?
When the framework was introduced in 2020, angel funds were kept outside the benchmarking requirement. Managers of angel funds and large value funds should check the current Master Circular for any exemptions that apply to their scheme.
Conclusion
Performance benchmarking turns a manager's track record from a private claim into a comparable, independently computed figure. The obligation starts earlier than many expect, one year from first close, and the quality of the output depends entirely on the quality of the cash flow and valuation data submitted. Managers who build a reconciled, dated data trail from day one will find benchmarking routine, and will be able to use their benchmark reports with confidence when raising the next fund.
Launching or managing an AIF?
H K Davra & Co. supports AIF managers with SEBI compliance, PPM audits, CA certifications and investor reporting.
Talk to usThis article is for general information only and does not constitute professional advice or solicitation. Timelines are as understood from SEBI circulars and the June 2026 Master Circular; confirm with the benchmarking agency's current submission calendar. Provisions are summarised as of October 2026. Please refer to the relevant provisions and seek advice on your specific facts.