INV 101: Benchmark choice defines the performance question
A portfolio’s return should be compared with a benchmark consistent with its objective and constraints. Higher return alone does not establish better management if the risk, duration or liquidity exposure differs.
Original practice scenario
An original insurance portfolio outperforms a short-duration benchmark after taking longer-duration exposure. Attribute the result before describing it as skill. Identify whether the benchmark reflects liability needs and investable constraints, and compare both risk and return.
Study check
Write the assumptions, the decision being supported and one limitation. Use the current course syllabus for the required terminology and scope; this introductory guide is not a complete course summary.
Reading sources
ActNet editorial guide · October 1, 2026 · Original illustrative examples.