What is a concern associated with the manager universe as a benchmark?

The concern associated with the manager universe as a benchmark being susceptible to survivorship bias is well-founded. Survivorship bias occurs when only the funds that have survived are included in the benchmark, overlooking those that have failed or been liquidated. This can lead to an overly optimistic representation of average performance, as it ignores the losses and underperformance of funds that did not survive.

When using the manager universe as a benchmark, the surviving funds may show attractive returns, which do not accurately reflect the reality of the entire population of funds. Consequently, this can mislead investors who are relying on such benchmarks to gauge the performance of their portfolios or to make investment decisions.

In contrast, the other options do not represent the primary concern surrounding the manager universe as a benchmark. For example, the notion of the median account being consistently investable does not address the issue of representativeness that arises from ignoring closed or underperforming funds. Similarly, indicating that the benchmark can only be identified ex-ante or that the median account has clear specification does not capture the essence of bias and misrepresentation inherent in the survivorship issue.