Benchmark Methodology

The default assumption FIBCOS rejects

It is common to state that the benchmark for a country portfolio is that country's main stock index. FIBCOS does not adopt that assumption. A concentrated portfolio of researched structural franchises may bear little resemblance to a broad domestic index in market-capitalisation profile, sector exposure, revenue geography or currency behaviour. Comparing them produces a number that is arithmetically correct and analytically empty.

What determines selection

• Geographic exposure — where revenue and assets sit, not where the company is listed.
• Market-capitalisation exposure — the realised size profile of the portfolio.
• Investment universe — the population the portfolio was selected from.
• Methodology and strategy — concentration, turnover and holding period.
• Currency treatment — the reporting currency and whether exposure is hedged.
• Other characteristics — including liquidity constraints and sector limits.

Illustrative examples

To make the concept concrete: an India portfolio might be measured against a broad India equity index such as MSCI India; a U.S. portfolio against the S&P 500 or another index better matched to its size profile; a Japan portfolio against a broad Japan index such as MSCI Japan.

These are illustrations of the reasoning, not selections. Each portfolio's adopted benchmark is recorded and published before live inception. The count shown here reflects the current portfolio records.

Adoption and change

A benchmark is adopted before inception and published with the portfolio. It is not selected afterwards, and it is not changed to improve a comparison. Where a benchmark is changed, the change, its date, its rationale and the full history under the previous benchmark all remain on the public record.

Reporting

Benchmark returns are reported for periods identical to the portfolio's, on the same currency basis, gross and net of any stated costs, in every monthly report and annual review.