What are the reasons that a fund will perform better or worse than its assigned benchmark?
When the General Board hires a manager, the Investment Staff selects a benchmark that best corresponds to the manager’s investment strategy. The manager is expected to produce investment results that surpass the benchmark over a given market cycle, usually three to five years. The reason a manager’s performance may differ from the benchmark is that the manager often chooses a portfolio of securities which differs from the composition of the benchmark. This portfolio is based upon the manager’s informed interpretation of factors, such as the future economic outlook and the relative strength of the underlying securities given the manager’s projected economic scenario. Over a given measurement period, to the extent that a manager’s investments are different from the benchmark, the manager will typically either underperform or outperform their benchmark. The Investment Staff is constantly monitoring managers’ performance. If a manager significantly underperforms his or her benchmark, the I
