How often should a government change the benchmark used to verify that its investment objectives are met?

The frequency with which a government should change the benchmark for verifying that its investment objectives are met is best determined by the specific entity establishing those objectives and considering the broader investment strategy. Investment benchmarks should reflect the current financial environment, investment goals, and the risk profile of the portfolio.

Using a flexible approach allows the government to adjust benchmarks as market conditions change, or as the investment strategy evolves, ensuring that the benchmarks remain relevant and aligned with the intended objectives. This responsiveness is crucial because it allows for adaptations based on significant shifts in economic conditions, regulatory changes, or shifts in policy priorities.

Establishing a fixed interval—such as quarterly, annually, or every three years—may not adequately address the dynamic nature of investment environments and objectives. Therefore, the best practice is to review and adjust the benchmarks as needed, guided by the specific circumstances of the entity and its investment goals. This method not only ensures the benchmarks remain applicable and useful but also aligns with effective treasury and investment management practices.