Choosing a comparator the board will still recognise in three years

We are asked, more often than is comfortable, to ‘build a custom benchmark’ from six indices in weights that match last year’s strategic allocation. That object can be calculated. It cannot be maintained when a trustee retires and the licence sits in a personal inbox.

A usable comparator has three qualities. It is named in the investment policy in words a solicitor would recognise. It is available from a house that will still sell the series next year. Its income and currency treatment match how the portfolio is reported — total return in sterling, or price return in local currency, not a mixture that flatters a quarter.

When a mandate is genuinely mixed — say, a charity with a spending rule and a large unlisted property line — we would rather show two official series side by side than a blend with invented weights. The property line can sit in a second exhibit. Blending it into gilts for the sake of a single line on the cover hides the thing the board is actually worried about.

Currency is the quiet wrecker. A global equity comparator in dollars next to a sterling portfolio will produce a story about ‘underperformance’ that is mostly the pound. We print both the local and the sterling series when the policy is silent, and we ask the board to pick one for the cover going forward.

If the official series cannot be licensed in time for the meeting, we do not scrape a chart from a newspaper. We leave the comparator panel blank, write ‘series not available under current licence’, and let the minute record the gap. A blank that is honest beats a line that cannot be reproduced.

The restatement reviews we do in Dorset usually find a quieter error: price return printed for a decade because someone copied a column in 2019. Fixing that is unglamorous. It is also the difference between a board that thinks it hired a weak manager and a board that has been reading the wrong column.