United Benchmark Fundamentals

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Description

benchmark fundamentals1. What is A Benchmark?2. How is a BenchmarkWhat is a benchmark? Constructed?How is a benchmark constructed?3. How are Benchmarks A benchmark is an index or a market Selected? measurement which is used to Benchmarks do not hold stocksassess the risk and performance of But represent a sample of stocks. 4. What Are the Main an investment. A benchmark is constructed to Types of Benchmarks?mirror the environment of an Benchmarks (often referred to as 5. Tradeable Benchmarks investment. Detailed researchindices) are useful tools for ensures that they provide an fund managers and investors to 6. Performance accurate tool for comparison.measure the performance of their BenchmarksInvestments against a common This research results in the 7. Market Indicator Indicator of investment performance. structure of a hypothetical holding Indices of stocks which is then marketedThe most important factor when as a measurement tool for fund8. Common Benchmarks using benchmarks is to ensure the managers and investors alike. in the Australian Market comparison of “apples with apples”or in other words as close to the 9. Diversified and Balanced measured investment universe as Fundspossible.10. Contact UnitedPerformance BenchmarksA performance benchmark is a What Are the Main Types of measurement of a broad market’sBenchmarks? performance and risk, and maycontain stocks that are less According to Standard & Poor’s, tradeable ...

Informations

• Publié par: Suib
• Nombre de lectures: 11
• Langue: English

Extrait

1. What is A Benchmark?

2. How is a Benchmark  Constructed?

3. How are Benchmarks  Selected?

4. What Are the Main  Typesof Benchmarks?

5. Tradeable Benchmarks

6. Performance  Benchmarks

7. Market Indicator  Indices

8. Common Benchmarks  inthe Australian Market

9. Diversified and Balanced  Funds

10. Contact United

benchmark fundamentals

What is a benchmark?

A benchmark is an index or a market measurement which is used to assess the risk and performance of an investment.

Benchmarks (often referred to as indices) are useful tools for fund managers and investors to measure the performance of their Investments against a common Indicator of investment performance.

The most important factor when using benchmarks is to ensure the comparison of “apples with apples” or in other words as close to the measured investment universe as possible.

How is a benchmark constructed?

Benchmarks do not hold stocks But represent a sample of stocks. A benchmark is constructed to mirror the environment of an investment. Detailed research ensures that they provide an accurate tool for comparison.

This research results in the structure of a hypothetical holding of stocks which is then marketed as a measurement tool for fund managers and investors alike.

How are benchmarks selected?

There are no formal guidelines for how fund managers should choose a benchmark for a particular investment.

Research houses such as van Eyk, Assirt and Morningstar do, however, provide an evaluation of funds and provide the appropriateness of the relevant benchmark used.They may also indicate where there is not an appropriate benchmark available.

Benchmarks are therefore selected and regulated, informally, by these research houses .

What Are the Main Types of Benchmarks?

According to Standard & Poor’s, there are three common types of benchmarks: tradeable, performance and market indicator indices.

Tradeable Benchmarks

A tradeable benchmark pools stocks that are highly tradeable and therefore highly liquid.The S&P/ASX 50 is an example of a tradeable benchmark.The Dow Jones (US Index) is another example. Sometradeable benchmarks such as S&P/ ASX 200, are also considered performance benchmarks due to their broad scope.

Performance Benchmarks

A performance benchmark is a measurement of a broad market’s performance and risk, and may contain stocks that are less tradeable than others.It usually covers 80%90% of a market’s capitalisation. TheS&P/ASX 300 and the S&P 500 (US Index) are examples of performance benchmarks.

Market Indicator Indices

Market indicator indices are the broadest of all benchmarks and cover close to 100% of a particular market. Beingso broad means that it is a more definitive measure of a market but will, almost certainly, include stocks which are not readily tradeable .

Common Benchmarks in the Australian Market Place:

MSCI World Index

A sample measure of performance for, and value of, the entire world’s listed stocks.Benchmark for the United International Equity and the United Global Equity Funds.

S&P/ASX 300 Accumulation Index

The broadest index for Australia, covering 91% of Australia’s share market capitalisation.Benchmark for the United Australian Equity Funds.

UBSWA 90 Day Bank Bill

Index for the Australian bond market and covers primarily government and semigovernment bonds, which provide regular income. Benchmarkfor the United Bond Funds and the United Fixed Interest Funds

Diversified or Balanced Funds

In the case of diversified or balanced funds, a benchmark is usually “created” by combining together segments of performance for the relevant asset classes, sectors, or regions across which the fund has exposure.

For example the United Balanced Fund is compiled of a mix of Australian Equities, International Equities, Property, Fixed Interest and Cash.The percentages of the fund invested in each of these sectors is compared to the relevant benchmark for that sector.

For more information on which benchmarks United use, please view the investment information Section of the relevant fund.

Contact United: Telephone:

United Investor Services:

Free Call:1800 333 700

United Adviser Services:

Free Call:1800 333 909. [e-mail] Mail: Level 3/30 Collins Street MELBOURNE VIC 3000