Using a universe of managers as a benchmark is very useful when comparing the performance of a fund manager. It is a technique that consists of using as a benchmark the average performance of all fund managers in a market.
The median of the universe of managers is used to calculate the benchmark . That is, taking into account all the managers that operate in that market ordered from highest to lowest yield, the benchmark will be the manager’s performance that is located in the middle and therefore has the medium performance.
One of its advantages is that it is very easy to measure, but often it is not a useful benchmark because it cannot be known in advance nor is it invertible. In addition, it will not take into account the performance of investment funds that have broken or disappeared, which is called “survival bias”.