Should benchmarks define a portfolio?

BENCHMARKING

Using benchmarks to define a fund's performance has become the norm, but a new analysis tool aims to cut through ‘one-dimensional' performance data to identify how good a manager really is at their job. Hardeep Tawakley reports

Whether it is a house, a car, or an investment: there are few things people should buy having only looked at one aspect of them. So when picking a fund in which to invest, why do the majority of investors only look at performance figures? For many years, sector and performance rankings relative to a benchmarked index has been one of, if not the only, measure investors have considered when selecting a fund. While it is fair to use benchmarks as a yardstick by which to measure short- and long-term performance of a fund or fund manager, they have increasingly come to define an investm...