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CFA Level I Exam · Benchmarking Returns

Qualities of a Valid Benchmark: The SAMURAI Checklist

Updated 7 October 2026 · Fact-checked

A valid benchmark passes a checklist, remembered as SAMURAI: Specified in advance, Appropriate, Measurable, Unambiguous, Reflective of current investment opinions, Accountable (owned by the manager), and Investable. To answer a question, test the benchmark against each quality, find the one it fails, and choose that.

Understand Qualities of a Valid Benchmark

A benchmark is the yardstick you use to judge a portfolio manager. Without one, a return of 8% means nothing. Was it good? It depends on what the market did and what the manager was asked to do. A benchmark gives the return a reasonable alternative would have earned at similar risk and style.

Not every yardstick is fair. A manager of large European stocks should not be judged against a global bond index. So the curriculum gives a checklist of qualities. The common memory aid is SAMURAI:

  • Specified in advance: the benchmark is chosen before the evaluation period starts, not picked afterward because it flatters the result.
  • Appropriate: it matches the manager's investment style, mandate and risk profile.
  • Measurable: its value can be calculated reliably and often enough to compare with the portfolio.
  • Unambiguous: the names and weights of its securities are clearly known.
  • Reflective of current investment opinions: the manager has knowledge of, and views on, the securities in it.
  • Accountable: the manager accepts the benchmark and its use for judging performance. This is the "owned by the manager" idea.
  • Investable: it is possible to hold the benchmark's securities in their weights, so passive replication is a real alternative.

Some sources word the letters slightly differently, so learn the ideas, not only the acronym. Exam questions describe a benchmark in a few sentences and ask which quality it lacks. Your job is to match the flaw to the quality.

A useful way to think: a good benchmark is a fair, pre-agreed, replicable, transparent test of the manager's skill. Each quality blocks one way the test can be unfair or gamed.

Key formulas to remember

SAMURAI checklist
Specified in advance, Appropriate, Measurable, Unambiguous, Reflective of current investment opinions, Accountable, Investable
A valid benchmark should meet all seven. Exam questions usually show one failing.
Active return
Active return = Portfolio return − Benchmark return
Only meaningful if the benchmark is valid. A poor benchmark makes active return misleading.
Investable test
Could an investor hold the benchmark's securities in their weights at reasonable cost?
If not, passive replication is not a real alternative.

How to solve Qualities of a Valid Benchmark questions

Use this method for any question that asks whether a benchmark is valid or which quality it fails.

  1. 1Read the stem and note the manager's mandate: asset class, region, style, size, and risk level.
  2. 2Note what the benchmark is: its name, holdings, weights, and who chose it and when.
  3. 3Check Specified in advance: was it fixed before the period, or chosen or changed afterward?
  4. 4Check Appropriate and Reflective: does it match the mandate, and does the manager know and hold views on its securities?
  5. 5Check Unambiguous and Measurable: are holdings and weights clear, and can the value be computed regularly?
  6. 6Check Accountable and Investable: does the manager accept it, and can it actually be held and replicated?
  7. 7Pick the single quality the stem's details point to, and eliminate options that name qualities the benchmark meets.

Quickest way: Match the clue word to the quality

When to use it: Use when the stem is short and you have about 90 seconds.

  1. Look for the trigger phrase in the stem.
  2. Chosen after results or changed later points to Specified in advance.
  3. Different style, size or region than the mandate points to Appropriate.
  4. Illiquid, restricted or not tradable securities point to Investable.
  5. Weights or holdings unknown or unclear point to Unambiguous.
  6. Manager did not agree or was not told points to Accountable.
  7. Pick the quality, then eliminate the other two options.

Common mistakes in Qualities of a Valid Benchmark

  • Confusing Unambiguous with Measurable.

    Both sound like they are about clarity.

    Fix: Unambiguous is about knowing exactly what the holdings and weights are. Measurable is about being able to calculate its return regularly.

  • Treating Investable as the same as Appropriate.

    A benchmark that suits the style seems tradable too.

    Fix: Appropriate is about fit with the mandate. Investable is about whether you can actually buy and hold it, for example because of liquidity or access.

  • Forgetting that the benchmark must be set before the period.

    Students focus on the content of the benchmark, not its timing.

    Fix: If the stem says it was selected or changed after seeing results, the answer is Specified in advance.

  • Ignoring the manager's role.

    Benchmarks feel like an industry index, not an agreement.

    Fix: If the manager is not aware of or has not accepted the benchmark, it fails Accountable. The manager must own it.

  • Memorising SAMURAI letters without the meaning, or mixing up the wording of the R and A.

    Acronyms are easy to recall, but sources word some letters differently.

    Fix: Learn each quality as a plain idea and a clue phrase, so you can answer even if the wording differs.

Worked examples

Example 1

A manager runs a portfolio of large-capitalisation US equities. No benchmark was agreed before the period began. At year end, after seeing that the portfolio returned 6%, the investment committee chooses a large-capitalisation US equity index as the benchmark because it returned only 2%. The index is liquid, its holdings and weights are published, and the manager accepts it. Which quality of a valid benchmark is MOST clearly violated? A. Investable B. Specified in advance C. Measurable

Show the solution
  1. Mandate: large-cap US equities.
  2. The chosen index is also large-cap US equities, so it fits the mandate and Appropriate is met.
  3. No benchmark was agreed before the period, and this one was chosen at year end after seeing results. The clue is the timing.
  4. Measurable is not at issue, since the index return can be computed from published data.
  5. Investable is not at issue, since the index is liquid and can be held in its weights.
  6. The only quality violated is Specified in advance.

Answer: B. Specified in advance

Example 2

A fund's benchmark is a custom blend of securities, but the written documents never state the individual holdings or their weights, so two analysts compute different benchmark returns. Which quality is MOST clearly lacking? A. Unambiguous B. Accountable C. Specified in advance

Show the solution
  1. The clue is that analysts compute different returns.
  2. They differ because the holdings and weights are not stated.
  3. That is a lack of clearly known names and weights.
  4. Accountable is about manager acceptance, which the stem does not mention.
  5. Specified in advance is about timing, which is also not mentioned.

Answer: A. Unambiguous

Exam tips

  • Questions are standalone with three options, so find the clue phrase first, then eliminate the two qualities that clearly hold.
  • Several qualities can seem to fit. Choose the one the stem's key detail points to most directly.
  • Expect scenarios about timing (Specified in advance), liquidity (Investable) and manager agreement (Accountable).
  • Learn each quality as an idea in plain words, because wording can differ from the acronym.
  • There is no penalty for wrong answers, so always answer; if unsure, remove the quality that clearly holds.

Practice questions from Benchmarking Returns

Qualities of a Valid Benchmark in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Qualities of a Valid Benchmark: frequently asked questions

What does SAMURAI stand for in benchmarking?

It stands for Specified in advance, Appropriate, Measurable, Unambiguous, Reflective of current investment opinions, Accountable and Investable. It is a memory aid for the qualities of a valid benchmark. Learn the meaning of each, as sources may word some letters slightly differently.

What is the difference between an investable and an appropriate benchmark?

Appropriate means the benchmark fits the manager's style, mandate and risk. Investable means you could actually hold its securities in their weights. A benchmark can fit the mandate but still be hard to replicate because of illiquid securities.

Why must a benchmark be specified in advance?

Choosing it after results are known lets someone pick a benchmark that makes performance look good. Setting it beforehand keeps the evaluation fair and objective.

What does it mean for a benchmark to be owned by the manager?

It means the manager accepts the benchmark as the fair measure of performance and is accountable against it. A manager who did not agree to the benchmark cannot reasonably be judged by it.