Performance Measurement Solution

Many investors mistakenly base the success of their portfolios on returns alone. Few consider the risk that they took to achieve those returns. Performance measurement tools allow you to measure how well an investment portfolio or an investment manager has performed over time. Absolute measures determine how well an investment portfolio has performed, while relative measures determine how well an investment portfolio has performed compared to a benchmark, such as a market index, universe, or target return.

Attribution analysis uncovers the impact of the manager's investment decisions with regard to overall investment policy, asset allocation, security selection, and activity. A fund or portfolio's returns are compared to a benchmark to determine whether a manager is actually skilled or just lucky. For example, if a domestic portfolio manager overweighted a particular sector compared to the benchmark, attribution analysis can determine whether or not the decision added value during the period. Measuring performance offers an effective method of determining whether or not your organization is meeting its goals and achieving its mission.

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