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. Manager Universe (Benchmark)

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  2. Closet Indexing

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  3. Performance Audit

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  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. Benchmark

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