Benchmarking

What does investing in energy funds have to do with the Russian stock market or the India Mumbai Index? Is there one primary benchmark you can use to forecast how your portfolio will perform?

Few alternative-investment advisors would insist on calling attention to benchmarking, as it can be a misleading way to gauge a manager’s value-added. In fact, picking the right benchmarks is critical not only to gauging relative performance but also to picking up style drift.

We find benchmarking to be useful in understanding how one manager’s skill sets compare to those of his peer group. For example, we have compiled benchmarks of Japanese long/short equity managers, Indian mid-cap long/short managers, Asian debt managers, and European long/short equity managers.