Why are benchmarks important?
This video explains what benchmarks are and highlights why they are important to portfolio managers and investors alike.
Key takeaways:
- Benchmarks are important because they serve as a standard against which the performance of an investment can be measured
- In the equity market, well-recognised benchmarks include the FTSE 100 and S&P 500, while within fixed income it’s the Bloomberg Barclays Global Aggregate Bond Index.
- By reviewing the performance of an investment relative to its benchmark, an investor can gain valuable insight into how the portfolio manager’s asset allocation has contributed to out/underperformance.
Glossary
The allocation of a portfolio according to an asset class, sector, geographical region, or type of security.
These are the views of the author at the time of publication and may differ from the views of other individuals/teams at Janus Henderson Investors. References made to individual securities do not constitute a recommendation to buy, sell or hold any security, investment strategy or market sector, and should not be assumed to be profitable. Janus Henderson Investors, its affiliated advisor, or its employees, may have a position in the securities mentioned.
Past performance does not predict future returns. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.
The information in this article does not qualify as an investment recommendation.
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