Glossary
Benchmark
A Benchmark is a reference index or comparison measure against which portfolio performance is assessed. In a mandate context the Benchmark is agreed with the client and reflects the Strategic Asset Allocation. It enables an objective evaluation of portfolio performance over time.
At a glance
- A Benchmark should match the client's Investment Strategy and risk appetite; an ill-chosen reference measure distorts the assessment.
- Positive or negative deviations from the Benchmark are disclosed transparently in mandate reporting.
- Past over- or underperformance relative to a Benchmark is not a reliable indicator of future results.
Frequently asked questions
Not necessarily. Some mandates, in particular absolute-return-oriented approaches, measure themselves against an absolute return target rather than an index. What matters is that the chosen reference measure is appropriate to the Investment Strategy and the client's expectations, and is clearly defined in the mandate agreement.
Part of the topic
Discretionary Mandates
This entry is for general information purposes only and does not constitute investment, legal or tax advice. It is a simplified summary of the legal position and tax treatment.