In fund performance evaluations, what is a peer group?

A peer group is defined as a collection of fund managers or funds that share similar investment styles, strategies, or objectives. This grouping is essential in fund performance evaluations, as it allows for a more accurate assessment of a fund's performance relative to its peers, providing insights into how well a fund is performing in comparison to other funds operating under comparable circumstances.

Using a peer group for evaluation helps investors and analysts to discern not only the effectiveness of investment strategies but also to consider risk-adjusted returns within a relevant context. By comparing a fund's performance to those in its peer group, stakeholders can get a clearer picture of whether the fund is truly creating value and how it stacks up against its direct competitors.

In addition, while other options exist, such as regulatory bodies and benchmarks based on different parameters, they do not specifically represent the collection of funds or managers with similar strategies necessary for accurate performance evaluation in this context.