Custom Security-Based Benchmark
I'm finding a difference between the CFAI definition and the Schweser definition, this is my understanding:
CFAI:
You have the manager's ENTIRE investment universe, from which the manager can pick investments. The custom benchmark is created from weighting that WHOLE universe in a manner similar to the manager's investment process.
This is in contrast to Schweser:
Construct the benchmark from assets SELECTED FROM the manager's universe and weighted to reflect the manager's allocations (allocations = process?).
Can anyone please help me reconcile the two? It sounds like Schweser only uses SOME of the securities. Thanks! |