WASHINGTON – Before determining which benchmark is appropriate to determine portfolio and securities performance, credit unions might want to consider each of their characteristics. Callahan & Associates, Inc. reports that benchmarks serve several purposes from evaluating mutual funds and money managers to determining investment portfolio performance. Before a credit union selects a benchmark, it might make sense to quickly review the characteristics associated with good benchmarks, according to Mike Philbin, vice president, Sales, Callahan's Trust for Credit Unions. Citing an article titled "Alternatives to Broad Market Indexes," by Thomas M. Richards, CFA, Principal, Richards & Tierney, Inc., Chicago, Philbin said a "valid and effective" benchmark must be investable; appropriate; an informed opinion; unambiguous; and specified in advance. "If any of these attributes are missing, it becomes difficult to have confidence that the benchmark provides a valid point of reference for measuring performance," Philbin wrote in an Oct. 17 article on Callahan's Web site. * Investable: The option should exist to invest in the benchmark as an alternative to the portfolio under consideration. For example, it is not possible to invest prospectively in the bond fund that will produce top-decile results come year-end, but it is possible to invest in the two-year treasury, Philbin wrote. * Appropriate: The benchmark's main characteristics are consistent with those of the portfolio being measured against it. For example, a credit union's mortgage-backed securities portfolio is compared to a mortgage-backed bond index, according to the Callahan article. * Informed Opinion: The investments in the benchmark and how they perform are understood, so the performance of the portfolio against the benchmark can be explained. * Unambiguous: There is an easy way to ensure against ambiguity for a benchmark-make sure the name and weight of the index or peer group members are clearly defined, Philbin wrote. * Specified in Advance: The benchmark is selected/constructed prior to comparing portfolio performance. This might seem like common sense but assigning or changing the benchmark after the fact can understate or overstate performance comparisons, according to the article.