Comparison Universe


DEFINITION of 'Comparison Universe'

A comprehensive grouping of investment managers with similar mandates and investment objectives, used as a benchmark to measure a money manager's performance. The size of the fund or money management firm, in terms of assets under management, is another consideration in creating a relevant comparison universe. The best money managers generally figure in the top quartile of their comparison universe on a consistent basis.

BREAKING DOWN 'Comparison Universe'

One criticism of using a comparison universe to measure how well a manager is doing, is that the defined parameters may be too broad to be an effective gauge of performance. Another drawback is that a comparison universe may set an unrealistically high benchmark for investment performance, by excluding poorly-performing managers who are no longer in business, or whose assets have been merged with those of another manager. This is called survivorship bias.

  1. Benchmark

    A standard against which the performance of a security, mutual ...
  2. Survivorship Bias

    The tendency for mutual funds with poor performance to be dropped ...
  3. Performance Audit

    An audit performed on an asset manager by an outside accounting ...
  4. Universe Of Securities

    A set of securities that shares a common feature such as the ...
  5. Closet Indexing

    A portfolio strategy used by some portfolio managers to achieve ...
  6. Manager Universe (Benchmark)

    A peer group of investment managers who have the same investment ...
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