Published 2026-10-14
Benchmark mismatch
A benchmark mismatch is when a strategy is measured against the wrong reference — usually one that flatters it. It is easy to do, and hard to notice once it is done.
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What it is
A benchmark mismatch is when a strategy is measured against the wrong reference.
A small-cap strategy compared to a large-cap index. A long-only strategy compared to a hedge fund. A one-month test compared to a decade.
Why it flatters
The mismatch usually runs in one direction: toward the number that looks better.
| Mismatch | Effect |
|---|---|
| Wrong universe | Measured against something easier to beat |
| Wrong period | Measured over the window that suits it |
| Wrong risk level | Compared to something riskier, without saying so |
How to check
Ask two questions: what is the benchmark, and would a passive alternative have done the same or better?
A strategy measured against the wrong thing is not outperforming. It is being compared to the wrong thing — and those are not the same claim.