Benchmarking Institutional Investment Portfolio Performance

In order to measure the success of the portfolio and the effectiveness of the team managing the overall institutional portfolio, it is important to clearly establish and agree the benchmarks against which the portfolio’s performance will be measured over specific time frames varying from three to ten years. The investment committee needs to agree three separate critical benchmarks: the long-term target return, the strategic asset allocation composite benchmark and a peer group benchmark. Individual asset manager benchmarking is critical for attribution of outperformance between manager selection alpha and tactical asset allocation.