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. Manager Universe (Benchmark)

    A peer group of investment managers who have the same investment ...
  2. Closet Indexing

    A portfolio strategy used by some portfolio managers to achieve ...
  3. Benchmark

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

    The tendency for mutual funds with poor performance to be dropped ...
  5. Universe Of Securities

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

    An audit performed on an asset manager by an outside accounting ...
RELATED FAQS
  1. Are mutual fund performance numbers reported net of fees (operating expenses and ...

    The answer depends on how you define "operating expenses."Let's look at a cinematic metaphor to clear up this apparent ambiguity. ... Read Full Answer >>
  2. What can cause the rate of return to be negative?

    Several factors can cause an investment to have a negative rate of return. Poor performance of a company or companies, turmoil ... Read Full Answer >>
  3. How much of the asset management industry has moved from traditional managers to ...

    While the exact numbers are difficult to calculate due to variations in measurement and the overall growth of the asset management ... Read Full Answer >>
  4. What information should I focus on in my mutual fund's prospectus?

    The U.S. Securities and Exchange Commission (SEC) requires investment companies to provide potential and current investors ... Read Full Answer >>
  5. How can I get a free mutual fund prospectus?

    Mutual funds are sold via prospectus, as mandated by the Securities Act of 1933. The prospectus document outlines many features ... Read Full Answer >>
  6. Is there an index for tracking mid-cap stocks?

    There are several indexes for tracking mid-cap stocks. The most widely referenced is the S&P Mid-Cap 400, but others ... Read Full Answer >>
Related Articles
  1. Mutual Funds & ETFs

    Using ETFs To Build A Cost-Effective Portfolio

    ETFs are a viable alternative to mutual funds, but before you invest, there are a few things you should know.
  2. Mutual Funds & ETFs

    How To Pick A Good Mutual Fund

    Learn how to evaluate mutual funds and find the right one for you.
  3. Mutual Funds & ETFs

    Pros & Cons Of Bond Funds Vs. Bond ETFs

    Understanding the pros and cons of bond funds and bond ETFs will help you choose the instrument that is best for building your diversified bond portfolio.
  4. Mutual Funds & ETFs

    How Janus Capital Makes Money

    Before investing in Janus, it is prudent to understand how it makes money and what costs detract from shareholder wealth.
  5. Stock Analysis

    What Makes Goldman Sachs a Good Bet?

    Six years after the subprime meltdown, Goldman Sachs is a robust $87 billion company instead of a historical footnote. Here's why.
  6. Professionals

    Mutual Funds: How Many is Too Many?

    How many mutual funds are too many when it comes to a well diversified portfolio?
  7. Investing Basics

    Understanding Redemption

    In the investing world, redemption refers to cashing out the value of bonds or mutual funds.
  8. Investing Basics

    What is a Foreign Institutional Investor?

    A foreign institutional investor (FII) is a person or a group of people operating or registered in a country that’s not their domicile.
  9. Mutual Funds & ETFs

    How To Start a Hedge Fund In the United States

    A general overview of how to start a hedge fund firm in the United States, including complying with state and federal regulations.
  10. Mutual Funds & ETFs

    How To Start A Hedge Fund In The UK

    Starting a new hedge fund in the United Kingdom is more complex than in the United States. We discuss UK laws and regulations for starting a new hedge fund.

You May Also Like

Hot Definitions
  1. Fixed-Income Arbitrage

    An investment strategy that attempts to profit from arbitrage opportunities in interest rate securities. When using a fixed-income ...
  2. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  3. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  4. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  5. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
  6. Security Market Line - SML

    A line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky ...
Trading Center