Benchmark selection

Benchmark selection is critical. This has recently been the focus of more attention by the marketplace than ever before, as pension funds and their advisors are beginning to realise the importance of benchmark selection. The reason why it is so important is really very simple. When companies are omitted from a benchmark portfolio or when they are included at the wrong weight, the return of the benchmark changes. While these changes are important for funds who use passive management techniques, they are also important for those who use active managers as they are setting the target for those...