Everyone involved with investing, from chief investment officers and portfolio managers to back office operations, marketing, legal and compliance staff, needs to understand performance measurement.
This one-day training, designed to give non-performance professionals critical knowledge and understanding of performance measurement, provides just the right amount of detail, without overwhelming attendees or going beyond the most important concepts they need.
There is no prerequisite for this course. It is taught at the basic level.
Rates of Return
- Gain a grounding into the reasons we calculate returns the way we do.
- Walk away with a good understanding of the differences between exact and approximate methods, and time and money-weighted returns.
- Gain insights into why we compound returns and why returns sometimes don’t seem to make sense.
- Gain an understanding of the various approaches that are typically employed.
- Understand the differences between risk and risk-adjusted measures.
- Develop an understanding of the major formulas, including standard deviation, beta, Sharpe ratio and tracking error.
- Gain an understanding of the role of attribution, and the different approaches that are commonly employed.
- Learn the role of the Standards, as well as the key concepts including firm definition, composites, discretion, policies and procedures, and verification.
Students receive a binder with all of the PowerPoint slides, and a copy of the GIPS standards.
This is a one-day class. There will be no exercises unless students wish to work through some of the formulas.
RATES OF RETURN
- Why percentages are used
- The role of returns in judging performance
- The role of cash flows
- Time-weighted returns: why and how it’s done
- Money-weighted returns: their role in reporting
- When the numbers don’t make sense (and why they do!)
- A review of the four major classifications of benchmarks: market indices, absolute, peer groups, and custom
- The criteria that is often used to judge benchmarks
- Absolute versus relative attribution
- The Brinson models: how they differ
- The interaction effect: why it’s loved, why it’s hated
- Why fixed income attribution needs its own models
- Geometric vs. arithmetic: why and how we link across periods
- What GIPS is, what its role is and why it’s so important
- Firm definition
- Composites: what they are and why they’re important
- What discretion means
- How we calculate our returns
- What firms must give to prospects
- What verification is
- What performance examinations are