The selection of the benchmark that will be used throughout the investment process is an important is...
The selection of the benchmark that will be used throughout the investment process is an important issue. Benchmarks are used in a wide range of ways. Initially, it is used to understand the risk and return properties of a particular asset class. Once the asset allocation has been decided, significantly based upon this analysis, the manager selection decision is made. This decision is typically based upon the ability of the selected manager to add value compared to the risk/return profile of the asset class, again using the benchmark to proxy the asset class concerned. Finally, the s...
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