Manager Universe (Benchmark)

DEFINITION of 'Manager Universe (Benchmark)'

A peer group of investment managers who have the same investment style. Manager universe data is often used for comparisons and evaluating the performances of money managers. This analysis may report information such as the returns each fund generates against other similiar styles.

BREAKING DOWN 'Manager Universe (Benchmark)'

For example, a manager universe might consist of the subset of investment managers who manage large growth portfolios.

Evaluating investment performance using manager universe data has three major shortcomings:

First, it is difficult to compare managers, because they typically have different investment styles and change their investment styles periodically.


Second, manager universes are usually subject to survivorship bias, meaning that managers with poor performance records get dropped from the universe and the universe doesn't present a complete picture of all managers' performance.


Third, managers' rankings can change significantly from quarter to quarter because of market events and investment performance. Relying on manager universe data to evaluate a fund or portfolio's investment performance is, thus, an oversimplified approach. A benchmark portfolio provides a more accurate basis of comparison.

RELATED TERMS
  1. Comparison Universe

    A comprehensive grouping of investment managers with similar ...
  2. Style Drift

    The divergence of a mutual fund from its stated investment style ...
  3. Style Analysis

    The process of determining what type of investment behavior an ...
  4. Investment Style

    The overarching strategy or theory used by either a retail investor ...
  5. Investment Management

    A generic term that most commonly refers to the buying and selling ...
  6. Multiple Managers

    A situation that occurs when an investment portfolio's assets ...
Related Articles
  1. ETFs & Mutual Funds

    How's Your Mutual Fund Really Doing?

    Determine how fund managers are doing by sizing them up against their peers.
  2. Managing Wealth

    Is Your Investing Style Hot, Or Not?

    Don't let your portfolio construction fall out of fashion.
  3. Managing Wealth

    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.
  4. ETFs & Mutual Funds

    Style Drift Can Hurt Mutual Fund Returns

    Small, gradual changes in a portfolio manager's stated strategies can be a big risk for investors.
  5. ETFs & Mutual Funds

    Which Mutual Fund Style Index Is For You?

    The Russell Investments and MSCI Barra style classification systems can help you pick the right mutual fund - if you know how they work.
  6. ETFs & Mutual Funds

    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.
  7. Investing

    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.
  8. ETFs & Mutual Funds

    Has Your Fund Manager Been Through A Bear Market?

    How to find a portfolio that will survive when the bulls stop charging.
  9. Managing Wealth

    3 Alternative Ways To Assess Your Investment Manager

    Find out whether your funds are being managed according to your goals.
  10. ETFs & Mutual Funds

    Vanguard vs. Active Managers – A Performance Review

    Is Going Active in U.S. Large Caps Worth It?
RELATED FAQS
  1. 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 >>
  2. 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 >>
  3. 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 >>
  4. What is the difference between a sharpe ratio and an information ratio?

    Understand the meaning of the Sharpe ratio and the information ratio, and understand how they differ as tools for evaluating ... Read Answer >>
  5. 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 >>
  6. Does mutual fund manager tenure matter?

    Learn whether or not mutual fund manager tenure is an indicator that investors should use to determine how successful a fund ... Read Answer >>
Hot Definitions
  1. Quantitative Trading

    Trading strategies based on quantitative analysis which rely on mathematical computations and number crunching to identify ...
  2. Bond Ladder

    A portfolio of fixed-income securities in which each security has a significantly different maturity date. The purpose of ...
  3. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  4. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  5. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  6. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
Trading Center