“Reflective of Current Investment Opinions” is a requirement for a valid benchmark. What does this mean, exactly? My interpretation was that it’s a valid BM if the manager understands the benchmark enough to have opinions about whether to deviate from it or not. In other words, the stuff the manager does is stuff that can inform him/her about how to weight the securities in the BM. But if so, isn’t this just a rehash of the appropriateness criterion? Or is it something else? Thanks!
I think “appropriate” means something such as : “it is not appropriate to use the s&p 500 index for a fixed income fund”. While “reflective of current investment opinions” means that the portfolio manager really has an opinion on each security (or at least most of them) even if the bench could seem to be appropriate regarding the fund’s composition. I may be wrong though.
vic - you are right on these two what about “owned” (or “Accountable” in Schweser) ?
The only answer I got to this question I also had was : “you must be able to explain, to detail any difference with bench”. Well, if it can help… Have to say I’m not a native-english speaker.
I think Owned just means that the manager agrees with the plan sponsor that this is the benchmark to use, as in “taking ownership,” “I agree to be measured against that benchmark” (and hired and fired accordingly).
makes more sense !