Benchmark for an active investment strategy

Question

I analyze the results of a long-short investment strategy on European mutual funds. I would like to compare the performance of the strategy to a benchmark. But not wanting to bias the results, I would like to differentiate between active and passive strategies and therefore compare the results of my active strategy with an “active benchmark”. Do you have any idea about which benchmark I should use?

Thanks to those who will take the time to answer me.

investment strategies mutual funds

Thanks to those who will take the time to answer me.

Bob Baerker · Answer

I would suggest that you select  a benchmark that best reflects the sector or market that your mutual fund(s) is in.  For the USA, the IWM or SPY would be good proxies for the market.  If sector oriented, consider the SPDR ETFS (finance, health, technology, energy, etc.).

I'm not sure what the difference between an active or passive  benchmark is not am I clear as to what a "long-short investment strategy on European mutual funds" is (pairs trading?).  It would seem to me that regardless of the benchmark chosen, the results of  the comparison would be the relative performance of your strategy as well as when it out or under performs the benchmark.  For me, the latter would be the more important info.

Benchmark for an active investment strategy

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