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What is a 'Bogey'

Bogey is a buzzword that refers to a benchmark used to evaluate a fund's performance and risk characteristics. A bogey provides an index benchmark that can serve as a close proxy for comparing the investment scope of a fund.


A bogey refers to a benchmark for a mutual fund which provides the investor with a representative sample of a market segment for which it can compare performance and other characteristics. Benchmarks can be identified and utilized in different ways. Some benchmarks may be relative and set by an investor for comparing their fund to the broad market or other investments across the industry. A bogey typically refers to a specific benchmark that is set by the fund company as a close comparison for the fund itself.

Benchmark Comparisons

Investors use benchmarks to compare and contrast the performance of an index representing a market sample to various different types of funds and investments in the market. Benchmarks can be used for all kinds of purposes and can help an investor to get an idea of how market segments are performing across the industry.

The S&P 500 and Barclays U.S. Aggregate Bond Index provide two examples of benchmarks for U.S. equities and U.S. debt. Through February 1, 2018, the S&P 500 had a return of 24.39% and the Barclays U.S. Aggregate Bond Index had a return of 2.28%. These leading benchmarks are often used to help investors gauge the performance expectations of new investments in both equities and fixed income.

A bogey benchmark is often identified by a mutual fund company and referenced along with its objective and investment strategy in a fund’s registration documents and prospectus. Passive investment funds and their benchmarks provide a leading example of a bogey benchmark. These funds seek to replicate the performance and characteristics of an index with little return tracking or risk deviation. Other funds may use the bogey benchmark as the investment universe while building an investment strategy that seeks to outperform the benchmark.

Bogey Benchmark Analysis

A bogey benchmark will have similar if not the same performance and can also provide an index for comparison of the risk metrics of the fund. This makes bogey benchmarks ideal for analysis that seeks to ensure an investment is worth its risk. Active funds will have performance and characteristics that deviate from a bogey benchmark. This deviation allows for comparison not only of performance but also of risk characteristics. In the investment industry many investment funds fall short of beating their benchmarks over time therefore bogey benchmark analysis can help an investor decide between the tradeoffs of an active fund or a passive fund.

An investment fund’s Sharpe Ratio is one risk metric that provides for a comparison when looking at the characteristics of a mutual fund. Aggressive growth funds are a good example since their objectives often seek to outperform a specific index like the Russell 3000 Growth rather than a broad market index like the Russell 3000 or S&P 500.

The ClearBridge Aggressive Growth Fund is an aggressive growth fund with a bogey benchmark in the Russell 3000 Growth Index. The Fund provides transparent performance and risk reporting in comparison to the Russell 3000 Growth Index. Looking at its characteristics on a three-year basis the fund has a return 15.48% versus 46.26% for the Russell 3000 Growth Index.

Its alpha is -8.06 versus the benchmark’s showing its underperformance. Its Sharpe Ratio however shows that on a three-year basis the fund has generally taken on less risk than the Index while still providing for a positive return. As an aggressive growth fund the ClearBridge Aggressive Growth Fund has underperformed its bogey benchmark but when looking at broad industry benchmarks like the S&P 500 with a three-year return of 34.22% and the Barclays U.S. Aggregate Index with a three-year return of -3.62% it could still be a good investment alternative for investors seeking top performing funds with exposure to equities.

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