Benchmark-driven investment strategy is an

investment strategy In finance, an investment strategy is a set of rules, behaviors or procedures, designed to guide an investor's selection of an investment portfolio. Individuals have different profit objectives, and their individual skills make different tactics ...

where the target

return Return may refer to: In business, economics, and finance * Return on investment (ROI), the financial gain after an expense. * Rate of return, the financial term for the profit or loss derived from an investment * Tax return, a blank document or t ...

is usually linked to an

index Index (: indexes or indices) may refer to: Arts, entertainment, and media Fictional entities * Index (''A Certain Magical Index''), a character in the light novel series ''A Certain Magical Index'' * The Index, an item on the Halo Array in the ...

or combination of indices of the sector or any other such as the

S&P 500 The Standard and Poor's 500, or simply the S&P 500, is a stock market index tracking the stock performance of 500 leading companies listed on stock exchanges in the United States. It is one of the most commonly followed equity indices and in ...

. With the Benchmarks approach the investor chooses an index of the market ( benchmark). The goal of the fund manager is to try to beat the index performance-wise. *The strategic asset allocation is usually delegated to the benchmark chosen *The asset managers stay concentrated to tactical asset allocation and fund ( security) selection *No volatility control over timeBlitz, David C., and P. van Vliet. The volatility effect: lower risk without lower return. No. ERS-2007-044-F&A. Erasmus Research Institute of Management (ERIM), 2007. *Without volatility constraints over a long period the investor is expected to get higher returns

See also

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Further reading