Johnson is correct. A benchmark should be investable, which mean that the manager should be able to replicate the securities in the benchmark. Meinrod is incorrect. Although a benchmark should be reflective of current investment opinion, this property does not mean that a majority of investors would favor the securities in the benchmark. Instead it means that the manager can categorize the securities that compose the benchmark (e.g., value, growth, high yield.) and has an opinion regarding their attractiveness as an investment. This opinion can be positive, negative, or neutral |
