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Effective benchmarking provides sufficient information to determine when corrective action is necessary.
Indexes are valuable components of the benchmarking process, but by themselves are not sufficient. Simple index comparisons lack the context required to draw meaningful conclusions.
Because indexes provide only a single comparative data point for each time period, it takes decades* to determine with any statistical meaning whether or not an investment manager has positive or negative skill. So by the time you have enough data to reach a conclusion, it's far too late.
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