It is our goal to debunk myths found within the investment industry. One of the most persistent myths perpetuated by investment managers is that investors’ portfolios’ performance should be measured compared to a relative, market-based benchmark.
How your portfolio’s performance is judged – the benchmark against which it is being measured – can completely change the way your portfolio is structured. It is absolutely essential that the right benchmark is used to measure the success of your portfolio.
Unfortunately, the relative benchmarking practice can actually have a negative effect on your ability to achieve your goals and produce positive outcomes. The question that needs to be at the center of your portfolio design is: what is the purpose of the money?
Watch our video to learn about the issues with relative benchmarking in greater detail and see some concrete examples of how it can fail investors.
