The holy grail of investments

Why are investment managers moving away from benchmark investing? It is increasingly unnecessary in a world of absolute returns, writes Legg Mason's Christopher Zuehlsdorff.

If proof was ever needed, 2009 showed why managers should abandon benchmarked returns once and for all. True, after a tumultuous start to the year, investors could breathe a collective sigh of relief as bond and equity markets rallied strongly following their March low point. But how many traditional long only, active equity managers, replicated – let alone beat – their benchmarks? The answer, I suspect, is fewer than one might expect. The dramatic rally in low quality stocks put paid to that. And, while some long only managers undoubtedly enjoyed significant returns in 2009, few could boas...