Is it time to break up with your fund manager?

Fund Manager BreakupBy now you probably know that your duty to look after your investments does not end after the initial due diligence of selecting an investment manager. Manager selection is a crucial first step, but that is really only the beginning. You must establish a process to prudently monitor your investments with quantifiable criteria that will systematically generate a review of underperforming investments. Common reasons to replace an investment might include the investment manager retiring, the investment taking excessive risk, or the investment’s performance lagging the benchmark. However, sometimes after a thorough review of your investment it could make sense to retain it instead of replacing it. Let’s look at some of the reasons to not break up with or fire your investment manager.Continue reading

Benchmarks – Why, How, and Which to Use?

Why you need a benchmark

A common question from plan sponsors is “why do I need a benchmark?” Let’s answer this with an example. Let’s assume an investment in the small growth asset class returns 7 percent over the past 12 months. Most plan sponsors would consider a 7 percent return good. However, if the asset class small growth returned 10 percent then the investment does not look so good. It is important for plan sponsors to have a benchmark because without one they are only relying on absolute returns which can be deceptive.Continue reading