Overall Benchmark Comparison + Shareholder Engagement

This video explains the overall benchmark comparison calculation, and how shareholder engagement factors in. Transcript and screenshots for the video are below.

 

In the "Minimal", "Professional", "Inspiring", and "Institutional" style reports, you will see an overall benchmark comparison, such as the screenshot below. 

 

The calculation methodology is displayed in the disclaimers, and pasted below.

 

"The overall comparison is a coverage-weighted average of the comparison between the two portfolios, My test portfolio and S&P 500 + AGG, for each of the metrics displayed in the report across each of the major issue areas. For portfolios that include funds, managers' shareholder engagement activities are included in the overall comparisons for each of the 5 major issue areas if at least three companies have improved, or committed to improve disclosure or performance in that issue area following shareholder engagement by the fund managers in your portfolio over the last two years."

 

By default, for the "comparison" portfolio, which in this example is the portfolio titled "S&P 500 + AGG", shareholder engagement is not factored into its overall alignment score. The reason why is that most advisors use the "comparison" portfolio section to represent a blended benchmark of indexes. Indexes do not have fund managers conducting shareholder engagement on their behalf, while representative funds that track the index do have fund managers, which may or may not conduct shareholder engagement. In this example, the comparison portfolio consists of two funds, SPY and AGG, which are being used as proxies for the indexes, so it does not make sense for State Street (fund manager for SPY) and BlackRock's (fund manager for AGG) shareholder engagement to factor into the benchmark portfolio.