Page 82 - DCAC December 2024 Files

Managing a Prudent Due Diligence Process

Understanding Investment Performance

Benchmarks and Peer Groups

• Benchmark Index Performance is the investment performance of an unmanaged group of securities

(stocks or bonds) that make up an index.

– There are many indexes for different types of stock and bond mutual funds (e.g. S&P 500, Domestic

Large-Cap Value, EAFE, etc.)

• Peer Group Performance is the performance of a group of funds with similar investment objectives (i.e.

Domestic Large-Cap Value, Domestic Small-Cap Growth, Developed Foreign Core/Blend, etc.).

– The performance of each fund is measured against the performance of its appropriate peer group

and the percentile ranking of the fund indicates how it compares to its peers.

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– The median performance of the peer group is the 50 percentile.

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– Lower numbers indicate superior performance for a specific timeframe. The 10 percentile indicates
the fund outperformed 90% of its peers for that specific timeframe.

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