tag:blogger.com,1999:blog-2568941354104807757.post7444349150869279534..comments2023-10-05T09:07:24.225-04:00Comments on Investment Performance Guy: Effective reporting and perspectiveDave Spauldinghttp://www.blogger.com/profile/01777929408680234896noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-2568941354104807757.post-38962796214049037962009-06-19T22:16:49.037-04:002009-06-19T22:16:49.037-04:00Unfortunately, most "client reporting" i...Unfortunately, most "client reporting" is little more than an accounting statement. After all, a time weighted return is little more than the relative change in value over a given period of time. In spite of frequent valuations and calculations, in the end this reduces to the ratio of the ending value relative to the beginning value. We can calculate a geometric average growth rate but this is just the reconciliation of two accounting values. We can deliver this for every manager's product and perhaps even create an overall return for the portfolio of products. But in the end, we haven't answered any relevant question FROM THE CLIENT'S PERSPECTIVE. We have simply given an accounting report for the capital invested in each manager ASSUMING the client never withdraws any money or contributes anything to the account. Of course, these assumptions are incorrect (if they weren't there wouldn't be standards for calculating time weighted returns, right?) So, we provide a report that might be appropriate for each of the money managers, but has no meaning for the client. We are left with the question: "Is this really a CLIENT report?" Or is it a MANAGER report that we deliver to the client? Unfortunately, performance measurement is still stuck in its elementary role as a marketing function rather than an information function. And it is still acting as though its loyalty is to the investment firms rather than to the clients whose money is at risk in the various strategies, and whose fees pay everyone's salaries. Until performance recognizes that its first loyalty is to our clients, it will remain a back-office accounting extension, rather than the true value-added investment function that is its proper place within every investment firm.Stephen Campisinoreply@blogger.com