Performance measurement

Performance measurement of asset management


The Fund is often considered a litmus test of Fund management, and in the institutional context accurate measurement is a necessity. For this purpose, institutions measure the performance of each Fund (and usually for internal purposes components of each Fund) under their management, and performance is also measured by external firms that specialize in performance measurement. Leading firms measure performance (e.g. Frank Russell in the USA or BI-SAM in Europe) gather General information on industry, for example, showing how funds in General performed against these indices and similar groups in different time periods.

In the typical case (say, in the case of a direct investment Fund), the calculation is done (when the client is concerned) every quarter and shows the percentage change compared to previous quarter (for example, 4.6% of the total profit in US dollars). This figure is compared with other similar funds managed by the institution (for purposes of monitoring internal controls), with performance similar groups, and with relevant indices (where available) or a specially designed performance tests, depending on the circumstances. Firm performance measurement specialists calculate quartile and decile, and pay close attention to the ranking of any Fund.

Generally speaking, for an investment company, probably matches the performance rating for extended periods (for example, from 3 to 5 years) for the beliefs of their clients, where a very smooth short-term fluctuations in performance and the impact of the economic cycle. It can be hard, however throughout the industry there is serious concern about short-term indicators and their impact on customer relationships (and as a consequence business risks for organizations).

Sustainable the challenge is to measure whether the performance of the remaining after tax or before tax. Measuring after tax represents an advantage for the investor, but the tax position of investors may vary. Measurements before income tax can be misleading, especially in modes that implement tax income from capital gains (and not sell). Thus, it is possible that successful active managers (measured before tax) may be lagging on the results after taxes. One possible solution is to provide information on the situation, remaining after the payment of the tax some typical tax payer.