In addition to comparing a money manager's performance to a standardized index, IPEX also compares an account's performance to a representative peer group of money managers that we refer to as a money manager universe. The selection of a particular universe is based upon the money manager's investment style, and will normally correspond with the style specific index that IPEX has selected as the account's primary benchmark.

Two steps are involved in presenting universe numbers for comparison. The first step involves the construction of the universe. The underlying data is based upon composite performance numbers submitted by money managers to a commercial database. From this data, IPEX constructs a series of universes that correspond to a generally accepted style matrix. 

IPEX begins by examining data on over 1,200 money managers with over 4,500 investment composites. IPEX then divides the individual performance composites into their respective asset classes, e.g., domestic equity and domestic fixed income. Only money managers that report their historical investment performance on a gross total return basis and that have submitted at least five years of quarterly performance numbers are included.

Each of the asset class universes is then divided into more style specific groups. For the domestic equity managers, an R-squared matrix is used to construct a series of nine universes that are based upon the money managers' style and capitalization: large growth, large core, large value, mid growth, mid core, mid value, small growth, small core and small value. 

In order for a manager to qualify for a particular universe, its composite investment performance over the past five years must produce an R-squared coefficient of at least 80 when measured against a standardized style index assigned to that particular category and lower correlation coefficients when measured against all of the other equity style indices.

The second step entails calculating the performance of each universe. IPEX calculates performance by gathering all of the individual money manager performance numbers for a particular style universe and then ranking them from highest to lowest for each quarter. The 50th percentile performance number is then labeled as the Manager Universe Median.