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YFYS performance test: Implications for ESG

Strategies that have a lower alignment to the performance test benchmarks could become high risk for trustees as they could lead to failure of the test, over certain periods, despite longer-term outperformance, Mercer's Barlow points out.

How the performance test could be tougher

The proposed performance benchmark understates performance when it comes to adjustments for withholding tax and benchmarking credit exposure with traditional fixed income indices, meaning that relative performance is overstated, David Bell writes.