Manager Universe (Benchmark)

The universe of money managers is a big fat one...or at least the compensation is. And that compensation is highly leveraged to success. Beat the market by a lot, and you get paid a lot.

The harder question: "What is the market?"

Is it the S&P 500? Nasdaq? The FTSE? A smallcap index? A Lipper Growth...something?

The manager universe almost always has a relevant benchmark against which they're measured to determine whether or not they actually added value. Like...if the S&P 500 was up 20% in a given year and the manager was up only 16%, well...in a vacuum, that 16 might seem like a good number. But it's not. Investors would have done better just owning the index fund.

Cold, cruel world out there if you're not beating your benchmarks. Ex-money managers are oft found driving Uber and/or Lyft for a living.