| April 2004 | Volume 2, Issue 1 |
Managed Funds and Benchmarks Q&A
Q: What is a benchmark?
A: Used as a measure of market performance, benchmark consists
of a large group of stocks which the market capitalization is weighted
create an index, such as the Russell 1000 or S&P 500.
Q: Why does the Foundation use benchmarks?
A: Benchmarks are used as a tool for measuring performance of
the funds selected; they give the Investment Committee a tool to use in
the continuous evaluation of the Foundation’s investment strategy
and the managers that are selected.
Q: What are the Russell, DJIA, S&P and Wilshire indices?
A: An average of the performance of a group of stocks. If the
index has a large number, or a broad base, of stocks, it may represent
overall market performance. But an index can be narrowly based of fewer
stocks to represent performance of a group of specific cap size stocks
or the stocks of a single industry. The Russell indices are published
by the Frank Russell Company. The highest ranked 1000 stocks of the Russell
3000 index make up the Russell 1000, which has an average capitalization
of $6.1 billion. It is correlated to the S&P Composite Index of 500
Stocks published by Standard & Poor’s Corporation. The S&P
500 is a market value weighted index representing about 74 percent of
all stocks trading on the New York Stock Exchange.
Performance of US Market
Indexes - 12 Month Periods Ending December 31 |
||||
|---|---|---|---|---|
| 2000 | 2001 | 2002 | 2003 | |
| DJIA | -6.2% | -7.1% | -16.8% | 25.3% |
| S&P 500 | -10.1% | -13.0% | -23.4% | 26.4% |
| Wilshire 5000 | -11.8% | -12.1% | -22.1% | 29.4% |
| NASDAQ | -39.3% | -21.1% | -31.5% | 50.0%* |
| * See the graph on Page 1 for UNT Foundation performance figures for 2003. | ||||
Q: What is meant by the term Cap?
A: Cap is short for capitalization - the current total market
value of the outstanding stock of the companies held in a particular portfolio.
They are distinguished in size as large cap, mid cap and small cap.
Q: What benchmark does the Foundation use?
A: The Foundation employs an index that is appropriate for each
fund – a large growth index for a large cap growth fund, etc. The
funds employed by the foundation and their related benchmarks are listed
in the table below.
| Type of Fund | Manager | Benchmark |
|---|---|---|
| Large Cap Growth | Sands Capital Management | Russell 1000 Growth Index |
| Large Cap Value | Washington Mutual Investors Fund | Russell 1000 Value Index |
| Mid Cap Growth | Wasatch Ultra Growth | Russell 2000 Growth Index |
| Mid Cap Value | The Boston Company - Premier Value Fund | Russell 2000 Value Index |
| Bonds | Northern Trust Short - Intermediate Bond Fund | Merrill Lynch 1-3 Year Treasury Bond Index |
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Website updated: May 19, 2004 · Website comments or corrections: rsimmans@unt.edu