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.

RELATED TERMS
  1. Manager Universe (Benchmark)

    A peer group of investment managers who have the same investment ...
  2. Money Manager

    A business or bank responsible for managing the securities portfolio ...
  3. Benchmark

    A standard against which the performance of a security, mutual ...
  4. Multiple Managers

    A situation that occurs when an investment portfolio's assets ...
  5. Active Management

    The use of a human element, such as a single manager, co-managers ...
  6. Management Fee

    A charge levied by an investment manager for managing an investment ...
Related Articles
  1. Mutual Funds & ETFs

    How's Your Mutual Fund Really Doing?

    Determine how fund managers are doing by sizing them up against their peers.
  2. Investing News

    Vanguard vs. Active Managers – A Performance Review

    Is Going Active in U.S. Large Caps Worth It?
  3. Mutual Funds & ETFs

    Benchmark To Show Winning Returns

    You can't win if you don't keep score. Read on to learn how to measure your returns.
  4. Investing Basics

    Want A Career In Asset Management? Read This First

    When it comes to landing that job at an asset manager, not all degrees are created equally. Here's a look at the best schools for the job.
  5. Mutual Funds & ETFs

    Active Management: Is It Working For You?

    There are guidelines to be followed when comparing an actively-managed investment strategy with a benchmark.
  6. Investing Basics

    Explaining Assets Under Management

    Assets under management is a metric that measures the market value of assets that an investment company manages for investors.
  7. Mutual Funds & ETFs

    The 4 Key Elements Of A Well-Managed Portfolio

    If you choose an actively managed portfolio, be sure that your manager isn't neglecting one of these four points.
  8. Mutual Funds & ETFs

    Choose A Fund With A Winning Manager

    We break down the key components of analyzing a fund manager's performance so you can find a winner.
  9. Investing

    5 Benefits of Investing With One Asset Manager

    Learn why one asset manager may be better for your portfolio’s rate of return and underlying costs as opposed to many managers.
  10. Professionals

    Preparing For A Career As A Portfolio Manager

    Find out what it takes to win a spot in one of the most coveted financial careers.
RELATED FAQS
  1. What percentage of asset management firms are privately held and not publicly traded?

    Explore asset management firms, a major part of the financial services sector, and learn about the respective markets served ... Read Answer >>
  2. What is the difference between passive and active asset management? (SPY)

    Find out about active asset management, passive asset management, how these strategies are utilized and the differences between ... Read Answer >>
  3. Where do most fund managers get their market information?

    Many fund managers, whether they manage a mutual fund, trust fund, pension or hedge fund, have access to resources that the ... Read Answer >>
  4. Where does a hedge fund get its money?

    Learn how a hedge fund is structured and how the managing partner of the fund goes about the process of finding and soliciting ... Read Answer >>
  5. What is the difference between passive and active portfolio management?

    Understand the difference between active portfolio management and passive portfolio management, and how each strategy benefits ... Read Answer >>
  6. What should you take into consideration when choosing a portfolio management service?

    Understand several important issues and considerations when evaluating and choosing a potential portfolio manager and why ... Read Answer >>
Hot Definitions
  1. Labor Market

    The labor market refers to the supply and demand for labor, in which employees provide the supply and employers the demand. ...
  2. Demand Curve

    The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity ...
  3. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  4. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  5. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  6. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
Trading Center