Is a manager universe mandate considered a valid benchmark?

A manager universe mandate is considered not to be a valid benchmark primarily because it does not provide a suitable standard against which to measure investment performance. Valid benchmarks typically exhibit certain qualitative and quantitative characteristics, such as being investable, representative of the investment style, measurable, and time-aware.

A manager universe often consists of a collection of investment managers and their strategies rather than a specific, defined index or portfolio that investors can replicate or against which performance can be accurately measured. As such, it may not consistently reflect the risk and return characteristics of the segment of the market an investor is targeting. Additionally, if the universe does not apply rigorous selection criteria, it may lack the ability to capture the performance of a specific investment style or asset class.

Moreover, a benchmark should ideally be transparent and typically could be comprised of publicly available information. A manager universe, which may rely on subjective assessments or proprietary criteria, fails to meet these standards, leading to the conclusion that it does not satisfy the tests of validity required for a proper benchmark. This characteristic disqualifies a manager universe from being considered a valid benchmark for evaluating investment performance.