Q. Which of the following is NOT a use of Index a. Used as proxy for measuring performance of asset classes. b. To increase market efficiency. c. Used as Benchmark for actively managed portfolios Why is the answer not C? What happens in case of passively managed portfolios? I assume we take index return as benchmark over there.
Index returns are used as benchmarks for calculating alpha (excess returns) of actively managed portfolios.
Do we take index returns as benchmark in passively managed portfolios also?