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What should I compare the performance of my portfolio with?

What should I compare the performance of my portfolio with?

Benchmark indices are used to gauge the performance of an investment portfolio.

In order to evaluate the performance of your portfolio for any given period of time, find the corresponding index for each investment in your portfolio. For example, for US Equities, use the S&P 500 For your Small Cap portion, use the Russell 2000 Index, etc.

You can also compute weighted index blends that correspond to your index allocation (e.g., 40% MSCI / 60% S&P). If your manager or the portion of your portfolio significantly (by more than a couple percent) underperforms the corresponding index, be sure to carefully monitor this manager or portion of your portfolio.

If it happens for two or three years in a row, fire the manager. On the other hand, if a significant portion of your portfolio outperforms the corresponding index, consider taking a large amount of money out of this strategy and moving it to the underperforming strategy to rebalance your portfolio.

Tracking the performance of both your portfolio and individual money managers is your most important responsibility.

How Fast Should My Portfolio Grow?
How Often Do I Need to Rebalance My Portfolio?

Keywords: market performance, portfolio management, portfolio performance, benchmark, rebalancing,