Is it time to redefine benchmarks?
One of the most complex aspects in investing, on the part of the investor and the investment manager, is that of benchmarks. In essence, a benchmark is commonly understood as the yardstick against which an investment manager’s return is assessed and measured. Benchmarks are usually quoted stock market indices or the average of peer returns. While the notion of a benchmark might appear relatively straight-forward, there are two key aspects which Perpetua Investment Managers believes creates real complexity surrounding benchmarks, and especially index benchmarks (FTSE/JSE Shareholder-weighted Index (SWIX) or FTSE/JSE All-Share Index (ALSI) being most popular in SA):