Comparison Universe

AAA

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.

INVESTOPEDIA EXPLAINS '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. Universe Of Securities

    A set of securities that shares a common feature such as the ...
  2. Performance Audit

    An audit performed on an asset manager by an outside accounting ...
  3. Benchmark

    A standard against which the performance of a security, mutual ...
  4. Manager Universe (Benchmark)

    A peer group of investment managers who have the same investment ...
  5. Survivorship Bias

    The tendency for mutual funds with poor performance to be dropped ...
  6. Closet Indexing

    A portfolio strategy used by some portfolio managers to achieve ...
Related Articles
  1. Using ETFs To Build A Cost-Effective ...
    Mutual Funds & ETFs

    Using ETFs To Build A Cost-Effective ...

  2. How To Pick A Good Mutual Fund
    Mutual Funds & ETFs

    How To Pick A Good Mutual Fund

  3. Are mutual fund performance numbers ...
    Investing

    Are mutual fund performance numbers ...

  4. The Evolution Of Money Management
    Investing News

    The Evolution Of Money Management

comments powered by Disqus
Hot Definitions
  1. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  2. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  3. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  4. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  5. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  6. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
Trading Center