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.

Trading Center