In order to properly evaluate a manager's performance, that performance needs to be analyzed on a relative basis. IPEX relies heavily on comparison benchmarks (i.e., indices) to evaluate relative performance. All benchmarks are selected on a customized basis. These benchmarks are included in virtually all of the IPEX performance and risk reports, as well as several of the style reports. IPEX selects benchmarks by analyzing a particular money manager's investment style, as well as the account's investment objectives. The key to benchmark selection is to properly balance both of these factors. 

The actual analysis of a money manager's investment style is based upon a two part process: 1) an examination of the fundamental data associated with the individual securities that a money manager holds in its "typical" current portfolio, and 2) an examination of the correlation coefficients that track the relationship between a money manager's historical performance and the performance of various indices. Ideally, both of these approaches result in a consistent style measurement. Depending upon the above analysis, a particular benchmark may consist of a single index or a blend of several indices. IPEX regularly tracks over 300 equity and fixed income indices.

Total return benchmarks are selected for all accounts. In the case of a balanced account, each asset class, i.e., equity and fixed income, will be assigned individual benchmarks and the overall account will be assigned customized benchmarks that reflect the account's specific target asset allocation. The customized benchmarks are not rebalanced on a regular basis to reflect the account's current asset weighting. They are only rebalanced if the client has made a change in the account's target asset allocation. This approach helps the client to compare the investment results produced by both the target allocation, i.e., the investment policy, and the actual allocation. 

A series of benchmarks is normally assigned to each designated portion of an account (e.g., equities - total return). The primary benchmark is the benchmark that represents the best basis for evaluating the money manager's performance. The reference benchmark will generally consist of a broader index, and often will not be style specific. The purpose of the reference benchmark is to enable the client to view the money manager's performance in comparison to the broader market. Additional benchmarks, such as CPI to measure inflation, may also be used. The exact number and types of benchmarks used will vary from account to account, depending upon the money manager's style and the particular account's investment objectives.